Acting as a Guarantor of one's own business needs careful thought as you then become directly liable for the particular debt. If the Company does not pay when due, your personal assets, including your home, are at risk.

The position is even more serious where you are acting as one of several Directors, guaranteeing a sports club. There are three major areas of concern. The first is that the guarantee would normally be joint and several. This means that the Lender can go against all or any of the Directors, if the club does not repay when due. The decision is entirely in the hands of the Lender.

The second is that if one of the Directors decides that he or she is no longer willing to act as a Guarantor and accordingly notifies the Lender, it may call in the whole loan. If the club is unable to pay, then you may be asked to pay all or part of the loan.

The third issue is what happens when you decide that you wish to resign as a Director. Unless you terminate the guarantee which might harm the club, your guarantee will continue in existence until you can negotiate that another Director takes on your liability and the Lender agrees. This may not be easily achieved, particularly where you are a person of substantial means and the other Directors are of more modest means.

For further information please contact Hugh Ellins on 01793 511055 or hugh.ellins@clmlaw.co.uk