Free Release of Personal Guarantee Template

A release of personal guarantee is a document in which a lender or creditor confirms that an individual is no longer personally liable for a debt they had guaranteed.

Personal guarantees are common in business lending. An owner or director signs alongside the company, promising to pay from their own assets if the business cannot, and that promise usually survives long after the circumstances that prompted it.

A release of personal guarantee ends that exposure. Once signed by the creditor, the guarantor is no longer on the hook, and their personal assets are no longer available to satisfy the debt.

Crucially, only the party holding the guarantee can grant a release. A guarantor cannot release themselves, and neither can the business, however willing either might be.

A release matters most at the moments when a guarantee has outlived its purpose. Common situations include:

• Selling the business or your stake in it, where the guarantee would otherwise follow you.
• Resigning as a director or stepping back from an owner role.
• The underlying debt being repaid in full.
• The business having grown strong enough to borrow on its own standing.
• Refinancing, where a new facility replaces the guaranteed one.
• A divorce or separation where guarantees given for a shared business need untangling.

Selling a business is the situation people most often get wrong. Transferring shares does not by itself end a guarantee you personally signed, and buyers sometimes assume it does. Only the creditor can release you.

A release of personal guarantee should be short and leave no doubt about what has been released.

The Parties

The full legal name of the creditor granting the release and the individual guarantor being released.

The Original Guarantee

Identify it precisely: its date, the parties, and the agreement or facility it related to.

The Underlying Obligation

Reference the loan, lease, credit line, or contract the guarantee supported, with account or reference numbers.

The Release Itself

An express statement that the creditor releases and discharges the guarantor from all obligations under the guarantee.

Scope of the Release

Whether it covers all liability or only liability up to a stated date, and whether any element survives.

Effective Date

The date from which the release operates.

Other Guarantors

Say what happens to any co-guarantors, since releasing one does not automatically release the others.

Signature by the Creditor

Signed by someone authorised to bind the creditor, with their name and title, and dated.

This is the part that goes wrong most often, and the consequences surface years later.

A verbal assurance is not a release. Being told by a relationship manager that a guarantee is no longer needed, or that it will be dealt with, leaves you fully exposed if the business later fails.

Check the signatory’s authority. A release signed by someone without power to bind the lender may be worth little, so confirm the person signing can actually grant it.

Watch the scope. A release covering liability only up to a certain date leaves you exposed for anything after it, and a release limited to one facility does nothing about a guarantee you gave on another.

Tip: Ask for a written confirmation listing every guarantee you have given to that creditor before you negotiate a release. People routinely discover a second or third guarantee they had forgotten, given years earlier on a different facility.

Several limits matter, and misunderstanding them is expensive.

It does not cancel the underlying debt. The business still owes what it owes; only your personal backing of it ends.

It does not release co-guarantors. Where several people guaranteed the same debt, releasing one may leave the others carrying the full amount, which is worth raising with them before you sign.

It does not undo security you granted. If you charged a personal asset, releasing the guarantee and releasing that security can be two separate steps.

It does not apply to other creditors. Guarantees given to a landlord, a supplier, or another lender are unaffected by a release from this one.

It does not remove past liability unless it says so. Whether the release covers what has already accrued or only future exposure depends entirely on the wording.

Obtaining a release of personal guarantee is a negotiation as much as a document. Document Genius walks you through each section with simple questions.

1. Find the Original Guarantee

Locate the signed document and read exactly what you agreed to.

2. Identify Every Guarantee You Hold

Ask the creditor for a full list before you start.

3. Make the Case

Explain what has changed: repayment, a sale, improved trading, or replacement security.

4. Prepare the Release Document

Draft it to identify the guarantee precisely and state the scope clearly.

5. Have It Reviewed

A lawyer should check the scope and wording before you rely on it.

6. Get It Signed and Keep It Permanently

Store the executed release with your own records, not the company’s. Start yours now and have a draft ready for review.

Guarantees and their release involve enough at stake to justify professional input.

Have a lawyer review any release of personal guarantee before you rely on it. Whether the wording actually discharges you, and what it leaves behind, is exactly the kind of question that only shows its answer when a creditor comes calling.

Take independent advice if you are the guarantor. Your interests and the company’s are not the same, and the company’s solicitor is not acting for you.

Get advice before signing a business sale. Guarantee release is a term to negotiate as part of the deal rather than chase afterwards, when your leverage has gone.

Speak to a professional promptly if a creditor is already pursuing you. Time limits and procedural steps can apply.

Nothing here is legal or financial advice, and no rule about how guarantees are created, enforced, or discharged is stated anywhere on this page. Take advice from a qualified lawyer in your jurisdiction.