If you regularly find yourself trying to plug cash flow gaps in your business while you wait 30-90 days for invoices to clear, you’re not alone.
According to the Chartered Institute of Credit Management (CICM), 82% of SMEs encounter cash flow problems, with late customer payments and seasonal shifts in sales being the most common triggers.[1]
Invoice finance presents a fast, easy, and endlessly scalable solution for businesses in this position, with providers advancing as much as 80-95% of the invoice value in as little as 24 hours. However, many businesses worry that they’ll be left with a debt they can’t pay if their customers default or go out of business.
In this article, we’ll look at whether you can get invoice finance without a personal guarantee, who is eligible for invoice finance, and how your business can apply.
Key Terms Explained
Invoice finance: A funding method for businesses that offers a cash advance against unpaid customer invoices. Providers usually advance 80-95% in 24-48 hours, and your customer pays the full invoice amount according to their regular payment terms.
Personal guarantee: A legally binding contract between a finance lender and a business owner where a business owner or director agrees to personally repay a business debt if the company defaults or becomes insolvent.
Can You Get Invoice Finance Without a Personal Guarantee?
You can absolutely get invoice finance without a personal guarantee because the unpaid invoices themselves act as collateral for the lender. Some invoice finance facilities do require a personal guarantee or collateral—it all depends on the lender and their specific terms.
High-street banks are likely to ask for a personal guarantee, whereas independent lenders will often waive this requirement if you have a strong and trustworthy customer base. stage. However, in the event your customer does fail to pay, you will usually be liable for the repayments, which can negatively impact your cash flow.
Secured vs Unsecured Finance: What’s the Difference?
Before we explore invoice finance specifically, let’s look at how secured and unsecured finance works for business loans.
Secured Business Loans
A secured loan requires collateral, such as commercial property, land, or machinery. Lenders charge less interest for this option because the risk is lower, and you can usually borrow larger sums of money. The downside is that approvals tend to take longer due to asset valuation and legal checks. The lender can also seize your property if you fail to repay.
Unsecured Business Loans
Unsecured loans do not require physical assets as collateral. Instead, lenders check your credit history and cash flow to mitigate risk. Even without physical collateral, lenders usually require a personal guarantee, meaning the business owner or director is personally responsible if your business defaults. You’ll get faster access to funding but lower borrowing limits.
How Invoice Finance is Different from a Traditional Loan
Invoice finance is inherently a form of secured finance because—unlike with traditional loans—the unpaid customer invoices themselves act as the collateral backing the advance. You’re essentially borrowing money you’ve already earned, rather than taking on debt.
However, providers can offer secured or unsecured agreements involving personal guarantees and asset requirements.
See also: Invoice Finance vs Bank Loans for Manufacturers: Which is Right for You?
Recourse vs Non-Recourse Finance
When setting up an invoice finance arrangement, both you and the lender must decide who will absorb the debt if your customer fails to pay.
With recourse, if the customer can’t pay, your business is responsible for covering the amount owed. This is usually the lower-cost option.
Without recourse, if the customer can’t pay, the invoice finance provider absorbs the loss. Initial fees are higher with this option, but you get extra protection for your business.
Secured vs Unsecured Invoice Finance
| Feature | Secured invoice finance | Unsecured invoice finance |
|---|---|---|
| Primary collateral | Unpaid invoices plus secondary assets, such as property or equipment (with or without recourse) | Unpaid customer invoices only (with or without recourse) |
| Approval speed | Slower - requires extra asset valuations and legal work | Faster- focus on customer creditworthiness |
| Risk & liability | Owner/director and wider business assets on the line | Tied strictly to customer repayments - although you may be liable for payments if customers default |
| Funding limit | Higher borrowing potential | Capped strictly by value of outstanding invoice (usually 80-95%) |
Who Is Eligible for Invoice Finance?
You are likely to be eligible for invoice finance if you run a business in the UK that sells goods or services to other businesses (B2B) or government bodies (B2G) on standard credit terms.
Unlike standard business loans and overdrafts, invoice finance applications are evaluated based on the creditworthiness of your customers, rather than the financial standing of your business. You won’t usually need to provide personal collateral, because the invoices act as collateral themselves.
Lenders will require your invoices to be without any legal disputes, and they may have a minimum or maximum number of invoices they’ll finance for you. According to the British Business Bank, your accounts must also be detailed and accurate, presenting a good record of getting paid on time.[3]
See also: How Much Does Invoice Factoring Cost?
Reasons to Want Invoice Finance Without a Personal Guarantee
Although SMEs often have to provide some form of personal guarantee for business loans—and sometimes invoice finance—there are many valid reasons not to sign.
The business is separate from your personal finances.
You don’t want to risk losing your home, car, or other assets in the event your customers can’t pay.
The business has several co-directors, so it’s not clear who should be liable for repayments if your customers default.
Even in the event you do sign a personal guarantee, many funders will work with you to find an alternative route to recovering the funds, such as a payment plan. You will, however, be liable for the repayments if you enter an agreement with recourse.
How to Apply for Invoice Finance Without a Personal Guarantee
If you’re looking for invoice finance without a personal guarantee, you can use a comparison platform like InvoiceWise to find the best quote. By answering a few simple questions about your business and the kind of invoice finance you’re looking for, we’ll match you with dozens of competitive quotes from FCA-approved lenders that are tailored to your borrowing needs.
It’s super quick and easy—it only takes a few minutes to complete an online application. The finance company you choose will usually only take a day or two to approve your funding.
If you have any questions or just want to talk to someone about your options, contact us, and we’ll aim to get back to you in 24 hours. You can also learn more about invoice finance and how it works by visiting our homepage.
Invoice Finance FAQs
Can you get invoice finance without a personal guarantee?
Yes. You can get invoice finance without a personal guarantee because the unpaid invoices themselves act as collateral for the lender. However, some invoice finance facilities do require a personal guarantee or collateral—it depends on the lender and their specific terms.
Who is eligible for invoice finance?
Invoice finance is primarily available for B2B and B2G companies that trade with other commercial entities or public sector organisations on standard credit terms (usually 30-90 days).
What’s the difference between secured and unsecured invoice finance?
A secured loan requires collateral to mitigate the risks of the loan, such as commercial property, land, or machinery, whereas an unsecured loan does not. Secured loans are usually cheaper than unsecured loans, but secured loans take longer to be approved.
What are some reasons not to give a personal guarantee for invoice finance?
There are many valid reasons not to want to sign a personal guarantee for invoice finance. The main reason is that most business owners don’t want to put their personal assets (such as a house or car) on the line.
With invoice finance, you might be worried that you’ll be liable for the repayments if your customer defaults or goes out of business. Taking on an agreement without recourse will often protect you in this scenario, with the lender absorbing most of the risk.
Turn Your Unpaid Customer Invoices Into Instant Cash
Waiting 60-90 days for your client to actually pay drains your working capital and can halt your business growth.
If your invoices are trapped in long payment cycles, invoice finance bridges the gap instantly.
Compare quotes from FCA-regulated providers and unlock your trapped cash today.
References
1. Chartered Institute of Credit Management (CICM). “One in three SME leaders do not fully understand cash flow, despite 82% facing cash flow problems.” Retrieved 2026 from: https://www.cicm.com/resource/one-in-three-sme-leaders-do-not-fully-understand-cash-flow-despite-82-facing-cash-flow-problems.html
2. British Business Bank. “A guide to personal guarantees for business borrowing.” Retrieved 2026 from: https://www.british-business-bank.co.uk/business-guidance/guidance-articles/finance/guide-personal-guarantees-business-borrowing
3. British Business Bank. “Invoice Finance Checklist.” Retrieved 2026 from: https://www.british-business-bank.co.uk/business-guidance/guidance-articles/finance/invoice-finance-checklist
