The ‘Ltd’ lie: Your company credit card puts your house on the line
Solo self-employed business owners, who are also limited liability company directors, mistakenly believe limited liability protects them from everyday business credit cards. Even industry founders operate under this false sense of security, according to a Newspage report.
Imagine finding out your family home is on the line because of routine business expenses you put on the company credit card. As insolvencies climb, thousands of limited company directors are discovering too late that their business cards carried personal guarantees.
Too late: How people are finding out about this
Directors assume a credit card is ordinary operational borrowing shielded by “Ltd” status. In reality, lenders rely entirely on their personal signature, not the company’s credit. On top of that commonly unknown revelation, personal guarantees only trigger when the company collapses. That means directors only discover their home is on the hook when it is already too late to negotiate.
The Newspage brief reveals even financial professionals and experienced founders admit they never realised their everyday company cards came with personal liability attached.
Tony Sanchez, Founder at Bridging Loan Directory was one of them. Sanchez admits he has a company credit card, but was not aware that it might carry a personal guarantee.
Like many directors, I assumed the protection provided by operating through a limited company extended to routine card borrowing unless I had knowingly signed a separate guarantee. I had recently become aware that personal-guarantee insurance existed, but thought it was principally relevant to business loans and overdrafts rather than an everyday company credit card. I have never used it.
– Tony Sanchez, Founder at Bridging Loan Directory
Sanchez says this development has prompted him to check the terms of his own card. He suggests, “A significant personal commitment should be made conspicuous, not left for directors to discover when their company is already in difficulty.”
Personal guarantees
Flexible finance, including small business credit cards, remains the most frequently used type of borrowing among UK SMEs, according to the British Business Bank.
According to the MGAA, the UK only has one insurer that provides personal guarantee insurance for SME owners. That’s Yet Purbeck Insurance Services.
Arguably, this seems precarious for the UK freelancer and entrepreneur community, given how many limited company business owners are unaware of the liability attached to their business credit cards.
Yurbeck warns that most directors sign up for this everyday form of finance without realising it carries exactly the same personal risk as a six-figure business loan.
The warning comes as creditors’ voluntary liquidations 2 (CVLs) rose almost 9% in July 2026 compared with June, according to the latest Insolvency Service figures.
The majority of small business credit cards require a personal guarantee as standard, meaning the director, not just the company, is liable if the business can’t pay. Purbeck’s own casework shows many directors sign the application without registering the clause, assuming their limited company status protects them the way it does for other business debts.
Harvey Dhillon, Founder & CEO of founder accountancy Zmartly told Newspage,
A personal guarantee is not the small print. It is the reason you were lent the money at all. Most small companies have no track record to lend against, so the director’s signature is the security. Remove it and most of that credit goes too.
Dhillon explains Limited liability caps what you can lose at what you put into the company. However, a guarantee sits outside that cap, because it is a separate promise from you to the lender.
“When the company cannot pay, the lender comes to you, and limited liability is no answer,” says Dhillon.
Dhillon notes that of 1,931 company insolvencies in July of this year, 1,497 were creditors’ voluntary liquidations. That is a director closing their own company, exactly when a guarantee gets called in.