Deciding on Personal vs Corporate Guarantees for an Ecommerce Client

By Rose Brown
Content writer
Published: 28 March 2022 1 minute read

Personal and corporate guarantees for an ecommerce finance lender present different terms and risks

See how one retailer made a smarter choice through Rangewell in this case study.

All the information you need

The COVID-19 pandemic drove societal change like few other events in history - forcing people to adapt to new ways of living. Digital technology became the lynchpin for many businesses as companies began remote working and video conferencing more than ever. For online retailers, the rise in digital adoption meant that ecommerce boomed. 

During this boom, many businesses found themselves caught by an unanticipated challenge: they had more demand than ever, but supply chain disruption meant meeting that demand was difficult. This drove a rise in ecommerce finance applications, specifically geared at buying additional stock, investing in warehouses or other storage and even creating UK manufacturing facilities for products. 

With a rise in demand and subsequently in finance applications, some retailers found themselves in trouble. A client approached Rangewell’s team of brokers in a worrying position: they had taken on multiple loans in order to capitalise on the increased demand for garden furniture caused by COVID-19 lockdown orders. 

With 11 different facilities to repay at different terms and rates, the client was in a tricky situation that made planning for the future difficult. In addition, the client was aware that many of their loans were personal and wanted to switch to a more corporate format to protect their personal assets. 

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Why we were able to help

With the 11 different facilities, the client was repaying differing amounts at different times. They needed a more visible repayment plan that allowed them to plan business growth alongside their debts. Rangewell’s ecommerce finance brokers were able to assess the client’s current repayments and ascertain the client’s overall ability to repay. 

As ecommerce finance experts, we quickly identified the best lenders for our client’s needs. These lenders are specialists in the sector and were willing to offer generous terms because they understand ecommerce business models and the stock delivery/revenue purchase cycle involved.  

We were able to consolidate half of the client’s loans into a single facility of £750,000 - which was far more competitive in terms of rates and offered a lower, single monthly repayment compared to the multiple repayments they had previously made. 

Crucially, we were able to leverage a corporate guarantee against the loan - which meant the client was no longer personally liable for the debt. Instead, their business and assets were offered as collateral to provide added reassurance for the client and their family. 

About corporate guarantees for ecommerce finance

When you’re securing an ecommerce finance loan, you’re likely looking to grow your business. However, many lenders will not take your growth into consideration and may only offer terms based on your current position - which may, in turn, lead to asking for a personal guarantee. This means you will be personally liable for the debt, which can be both stressful and actively damaging to your personal life. 

Corporate guarantees instead leverage your business and assets such as stock inventory. This removes the personal risk and gives you more confidence and control. At Rangewell, we can help by arranging your finance deal and negotiating with the lender. This will involve demonstrating your business’ performance, goals and potential gains as a result of the investment so the lender is confident enough to offer a corporate guarantee. 

When you’re looking for finance to help grow your business, don’t end up like our client with 11 different repayments and a lot of added stress. Contact Rangewell first and our broker team can help you find the perfect funding package to maximise your ecommerce business’ growth without the risk to your personal capital. 

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