Are personal guarantees or security required for agricultural finance?

Updated October 2025

Short answer: when security and guarantees are required in UK agricultural finance

In most cases, yes — UK agricultural finance typically requires either tangible security (such as land, buildings, machinery, or livestock) and/or a personal guarantee from directors or partners. The exact requirement depends on the finance type, the strength of your business, and lender policy. A well-capitalised farm with reliable cash flow may secure funding largely against assets, whereas unsecured facilities often need a personal guarantee to proceed.

Security is the lender’s fallback if repayments are missed, while a personal guarantee (PG) is a promise from an individual to repay if the business cannot. Lenders use one, or both, to manage risk, especially in agriculture where income can be seasonal and weather-dependent. There are exceptions and mitigants, including government-backed schemes, but these rarely remove the need for security or guarantees altogether.

Quick view of typical requirements by product:

• Asset finance (tractors, combines, kit): usually secured on the equipment; PG is sometimes requested, depending on profile and age of kit.
• Hire purchase and leasing: secured on the asset; PG may be requested where credit risk is higher.
• Secured term loans or revolving credit: normally secured against land, buildings, machinery, or a debenture; PG often sought for SMEs.
• Invoice finance (dairy, produce, B2B): relies on receivables as security; director PG is common, though sometimes capped.
• Merchant/crop finance and input funding: security may include crop contracts, insurance assignments, or a PG.
• Unsecured business loans: typically require a PG and carry tighter affordability checks.

Bottom line: expect to offer security for asset-backed facilities, and be prepared for a PG on unsecured or working capital products. A strong balance sheet and track record can reduce the extent of guarantees required.

How requirements vary by product

Asset finance: tractors, combines, and agricultural machinery

For hire purchase, lease purchase, and finance leases, the equipment itself is the primary security. This is why these facilities are often easier to secure than general unsecured loans. Some lenders seek a PG to cover shortfalls, particularly for used machinery, higher-risk profiles, or longer terms.

Secured term loans for expansion or diversification

Secured business loans for building works, diversification projects, or larger investments commonly take a fixed or floating charge over assets. Where property is involved, lenders may seek a legal charge over land or buildings. Director or partner guarantees are frequently requested alongside, especially for small and mid-sized farms.

Agricultural mortgages and land-backed borrowing

Where a facility is secured against farmland or farm buildings, the land charge usually serves as the core security. The need for a PG can be lower if the loan-to-value (LTV) is conservative and serviceability is clear. However, many lenders will still ask for a PG for limited company structures to align incentives.

Invoice finance for agricultural suppliers and producers

Invoice discounting and factoring are secured primarily against outstanding receivables. Lenders typically add a debenture over book debts and may require a PG to cover dilution risk, disputes, or concentration with a few buyers. Strong debtor quality, credit insurance, and diversified customers can reduce the PG burden.

Merchant, crop, and input finance

Facilities geared to seed, fertiliser, feed, and crop cycles often link to purchase contracts, insurance assignments, or future proceeds. Security can be hybrid, reflecting production and delivery risk. A PG is common for smaller, closely held farms or where forecasts are central to repayment.

Overdrafts and revolving credit facilities

Banks may grant seasonal overdrafts secured by a debenture over business assets and backed by a PG. For established farming businesses with robust financials, lenders may rely more on business assets than on heavy PG exposure. Nonetheless, overdraft limits and covenants will reflect working capital volatility and market prices.

Unsecured business loans

“Unsecured” generally means no specific asset is pledged, not that no security exists at all. Most unsecured agricultural loans to SMEs still require a director or partner PG. Limits and pricing will reflect affordability, time in business, and credit history.

Factors that influence a lender’s demand for security or a personal guarantee

Business structure and ownership

Limited companies benefit from limited liability, so lenders frequently request a director PG to bridge the gap. Partnerships may face joint and several guarantees from partners. Agricultural estates and LLPs are assessed on a case-by-case basis, with structures, control, and capital at the forefront.

Asset base, leverage, and equity

A strong asset base enables secured facilities at competitive pricing, with lower reliance on PGs. High leverage, limited unencumbered assets, or significant existing charges typically increase the need for guarantees. Up-to-date valuations of land, buildings, and machinery help lenders calibrate their security requirements.

Cash flow resilience and seasonality

Lenders assess yield history, contracts, diversification, and market exposure to understand volatility. Reliable income streams and contingency plans support lower PG exposure. More uncertain cash flows, or high reliance on a single commodity price, generally push lenders to seek extra comfort.

Purpose, term, and exit strategy

Short-term working capital with a clear self-liquidating exit (for example, post-harvest settlement) can reduce reliance on PGs. Longer terms or speculative diversification may lead to heavier security or guarantees. Evidencing how the facility pays for itself is crucial to negotiation.

Note on government-backed guarantees

Facilities supported by the British Business Bank’s Growth Guarantee Scheme (GGS) are designed to improve access to finance for viable UK businesses. These can help lenders accept slightly higher risk, but they rarely remove the need for security or a PG altogether. Lenders decide whether to take personal guarantees and, as a rule, cannot take a PG over a principal private residence.

Ways farmers can reduce or manage guarantee and security exposure

There is no one-size-fits-all solution, but preparation and negotiation can meaningfully reduce exposure. Lenders respond positively to clean financials, realistic cash flow forecasts, and sensible structures. Consider the following strategies where appropriate to your situation.

• Prefer asset-backed routes where possible, so the financed kit provides primary security.
• Offer a larger deposit or shorter term to lower risk and reduce PG reliance.
• Split requirements across products (for example, machinery on HP plus a smaller overdraft) to match security to purpose.
• Discuss caps on PG liability or carve-outs where justified by fundamentals and asset cover.
• Use credit insurance on receivables to improve invoice finance terms and reduce PG pressure.
• Keep valuations, stock lists, herd registers, and land schedules current to evidence tangible backing.
• Demonstrate robust risk management: hedging policies, diversification, agronomy plans, and contingency budgeting.
• Maintain covenant headroom and show how you will comply through cycles.

Some directors explore personal guarantee insurance (PGI) to mitigate personal exposure. This is a separate policy with its own costs and conditions, and it does not remove your obligations under the guarantee. Seek independent advice if considering PGI or legal changes to your guarantee arrangements.

Documentation to prepare for stronger terms

Well-prepared files can directly influence whether a lender reduces or waives a PG. Prepare management accounts, final year-end accounts, 6–12 months of bank statements, and rolling cash flow forecasts. Add enterprise budgets, contract evidence, BPS/SFI history where relevant, and a current asset register with finance balances and valuations.

For asset-backed proposals, include supplier quotes, serial numbers where applicable, and expected useful life. For receivables-backed facilities, provide aged debtor listings, top customer concentrations, and credit insurance details if in place. Clarity and completeness can often save time and improve outcomes.

How Best Business Loans can help you navigate security and guarantee expectations

Best Business Loans is an independent introducer that helps established UK farming businesses connect with suitable finance providers. We do not lend money and we do not provide financial advice; we help you understand your options and introduce you to relevant lenders or brokers. Our AI-driven matching and partner network can save you time and improve your shortlist of potential providers.

What to expect from our process

Complete a short Quick Quote, share what you need funding for, and upload any supporting details. Our system analyses your profile and introduces you to providers active in agricultural finance for your situation. You can then compare approaches — including likely security and PG expectations — before deciding your next step.

We commonly support established businesses in agriculture, including farms seeking machinery finance, working capital, or diversification facilities. If you are exploring sector-specific options, you may also find our sector page helpful: farming loans and agricultural finance. Please note we do not currently support start-ups, sole traders, franchises, property finance, or commercial mortgages.

Frequently asked questions

Do all agricultural loans require a personal guarantee? No, but many do — especially unsecured loans and working capital facilities. Asset finance often relies on the equipment as security, though a PG may still be requested depending on risk.

What counts as security for agricultural finance? Common forms include land and buildings, fixed and floating charges over business assets, machinery under HP or lease, livestock, and book debts for invoice facilities. Lenders assess security quality, valuation, and priorities of existing charges.

Can I avoid a PG if I have significant land security? Potentially, particularly at modest LTVs with strong affordability, but lenders decide case by case. Many still prefer a PG for SME borrowers to align incentives and support recoveries.

Will government-backed schemes remove the need for a guarantee? Not usually. Schemes like the Growth Guarantee Scheme support lender risk appetite but do not automatically remove PGs. Policy specifics and lender criteria apply.

What happens if I default on a secured facility? The lender may enforce security, which could include repossessing financed assets or realising charged property. For PGs, the guarantor is liable for shortfalls; independent legal and tax advice is recommended before signing.

Next steps and how we stay fair, clear and not misleading

Submit your Quick Quote to see which providers may be suitable, without any obligation to proceed. We will never claim guaranteed approval or the lowest rates; outcomes depend on your business profile, credit status, and lender criteria. Any offer will include the lender’s terms, risks, fees, and security or guarantee requirements for you to review carefully.

Important information: Best Business Loans operates as an independent introducer; we do not provide regulated financial advice. Eligibility, security, and personal guarantees are determined by the lender or broker we introduce you to. Your home or property may be at risk if you provide security and do not keep up repayments, and financed assets may be repossessed if you fail to maintain payments.

Key takeaways

• Most agricultural finance involves security, a personal guarantee, or both, depending on product and risk.
• Asset finance is typically secured on the machinery; unsecured loans often require PGs.
• Stronger assets, cash flow, and documentation can reduce the need for PGs or help negotiate limits.
• Government-backed schemes may support access but rarely remove PG or security requirements entirely.
• Best Business Loans helps you compare your options by introducing you to suitable lenders or brokers.