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How To Negotiate Personal Guarantees With Banks And Landlords Safely

A practical Australian guide to negotiating and capping personal guarantees with banks and landlords so you protect your home while still getting deals approved.

3 Oct 2026Updated 14 Oct 20267 min read

Key Takeaway

Australian borrowers can often negotiate personal guarantees by capping the dollar amount, limiting the term, and removing broad “all‑monies” and indemnity wording that ties in unrelated debts. For example, setting a $150,000 cap on a lease guarantee instead of full rent for the term can materially reduce risk. The key actionable step is to propose clear, written limits and release triggers before signing, supported by advice from a broker, accountant and lawyer.

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Started a wildly successful business 12 months ago? The bank still thinks you're a startup risk. The standard institutional rule is that you need 2 full years of ABN history to get a mortgage, but if your cash flow is booming right now, you shouldn't have to wait another 12 months to buy a house. At Local Knowledge Finance, we have access to specialist alt doc lenders who will approve your loan with just 6 to 12 months of ABN registration and clean bank statements. Your success shouldn't be penalised by arbitrary timelines. DM me the word 'BUSINESS' to bypass the 2-year rule.

General information only, not personal advice. Your situation is assessed before any recommendation.

How To Negotiate Personal Guarantees With Banks And Landlords Safely

You can negotiate personal guarantees with banks and landlords by capping the dollar amount, limiting the term, and narrowing what debts are covered, instead of giving an open‑ended “all‑monies” guarantee that quietly puts your home on the line. The aim is not to avoid guarantees entirely, but to set practical limits that protect your family while still getting the deal over the line.

Fast answer: decide your maximum exposure, push for a written dollar cap and end date, remove “all‑monies” and broad indemnity wording, and tie the guarantee only to that specific facility or lease.

Highlighted personal guarantee clauses next to a sketch of a house. Understand exactly what your personal guarantee exposes before you sign.

1. What you’re really signing when you give a guarantee

1.1 Bank and landlord guarantees in plain English

A personal or director guarantee is a promise to pay if the company or tenant doesn’t. In Australia, banks and landlords use them to reach past the business and into your personal assets – including your home equity.

The danger is that standard forms are drafted for maximum protection for the lender/landlord, not you. They often:

Have no dollar cap – technically unlimited
Include “all‑monies” clauses that link in other debts
Run for the full term plus options on a lease
Include indemnity wording that makes disputes harder to run

If you also have or plan to have home or investment loans, these guarantees can undermine years of careful structuring to keep business and home debt separate (see /insights/keeping-business-and-home-debt-legally-separate-without-hurting-borrowing-power).

1.2 Where guarantees usually hide

You’ll commonly see guarantees on:

Business overdrafts and term loans
Equipment finance and fit‑out loans
Commercial and retail leases
Large trade accounts and distribution agreements

Our companion guide on smaller trade and fit‑out deals walks through these in detail: /insights/personal-guarantees-trade-accounts-equipment-leases-fitout-finance.

2. The four levers that actually move the needle

You have more room to negotiate how much and how long than whether there’s a guarantee at all. Focus your energy here. ### 2.1 Hard dollar caps The first, and most important, limit is a maximum dollar amount. Target: a cap that reflects the realistic loss risk, not the entire facility or lease value. Examples: - Bank overdraft $250,000 → guarantee capped at $150,000 - 5‑year lease at $80,000 p.a. (total $400,000) → guarantee capped at 6–12 months’ rent ($40,000–$80,000) Put the cap in the guarantee document, not just in…

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Frequently asked questions

Can you actually negotiate a personal guarantee with a bank?▾

Yes. Banks are often willing to negotiate the amount, scope and term of a personal or director guarantee, especially if the loan is well secured and the business has a solid track record. You’re unlikely to remove the guarantee completely, but you can usually cap the dollar amount, narrow what it covers, and agree future review or release points.

What is a reasonable cap on a director’s guarantee for a commercial lease?▾

A common benchmark is between six and twelve months of rent and outgoings, rather than the full value of the lease term. The right number depends on how re‑lettable the premises is and the strength of your business. The key is that the cap is written into the guarantee itself and not left as a verbal understanding.

How do I stop my guarantee from covering all my business debts?▾

Ask for the guarantee to be limited to a specific facility or lease, with the account number or lease clearly identified. Request the removal or tight narrowing of any “all‑monies” clauses that say the guarantee secures other present or future obligations. Get your lawyer to check that the drafting actually matches this intent before you sign.

When should I refuse to sign a personal guarantee?▾

Consider walking away if the lender or landlord refuses any cap or time limit, wants the guarantee to cover other entities you don’t control, or if your total existing guarantees are already near your personal comfort limit. It can also be sensible to decline where cash flow is marginal and your family home is at real risk if the business hits a bump.

Do personal guarantees affect my ability to get a home loan?▾

Yes, they can. Lenders are wary of large or unlimited guarantees because they represent potential future liabilities that don’t show up in today’s cash flow. Cleanly structured, capped guarantees tied to genuine business debt are easier to explain and model, which helps preserve borrowing power for your next home or investment loan.

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