Having dealt with a whole raft of Personal Guarantee issues for decades, we have experienced a great deal of ebb and flow as to how the banks pursue Personal Guarantees, both as an industry and individually.

In a series of articles, we set out some insights as to what the main factors are.
The areas we consider are:

  1. Economic cycle – to read this article click HERE
  2. Bank lending criteria and process
  3. Bank debt collection process

This, the second of 3 articles, focuses on Bank lending criteria and process.

Bank lending criteria and process
As discussed in the preceding economic cycle article, lending criteria has a huge impact on the ability to enforce a Personal Guarantee.

In an economic upturn the general trend for banks is to lend less cautiously, even if it is just because of the good times roll mind-set at all levels within banks and the wider business community.

As this gets looser, doing the right thing in relation to signing a Personal Guarantee becomes so secondary to getting the deal done that banks and their representatives barely do enough to tick the box let alone get anywhere near to a belt and braces approach.

Nowhere has this been more prevalent than with respect to banks’ taking of charges against residential homes with respect to business debt; our experience is that the scant observation of proper protocol in this regard has been the norm in the industry rather than the exception, and there are banks operating in overseas jurisdictions that really could teach the UK banking system a thing or two in this regard.

Our final article of this series will focus on Bank debt collection process.

11 September By Mel Loades

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