Key takeaways
- •Resigning as a director or selling your shares does not end a personal guarantee you gave the company's lender. You remain on the guarantee until the lender releases you in writing.
- •Under the Banking Code of Practice, a guarantor can end a director's guarantee by paying the bank, or by another arrangement the bank agrees to. The Code gives a right to pay, not a right to be released on request.
- •A director is usually released from a guarantee in one of three ways: the company repays the bank facility, the bank accepts a replacement guarantor or a different property as security, or the bank agrees to release the director.
- •Your company repaying its bank facility is the only route to a guarantee release that does not depend on the bank agreeing to a new arrangement, and a short-term private loan backed by property can repay it by a fixed exit date.
- •An all moneys guarantee covers everything your company owes that lender, now or in the future, so ask the bank for a written discharge of your guarantee that covers every facility, not only the loan that was repaid.
- •Secured Lending's loans to your company start from $250,000, run for 1 to 24 months, and are repaid through a defined exit, such as a bank refinance in the remaining owners' names or a property sale.
If you guaranteed your company's bank loan and you are now leaving the business, buying out a partner, separating, or simply want your own home free of the company's debt, the answer to how you get released is usually that the loan has to be repaid. Resigning as a director does not end the guarantee, and a bank rarely lets a guarantor go while the debt the guarantee covers is still owing.
We would be glad to help with that. If your company needs to repay its bank facility so a director can step away, a short-term private loan backed by property is a good fit, because it can be in place by the date your exit, share sale or property settlement is due. We lend our own funds, in most cases we decide within hours, and we can settle within 24 hours. The loan funds are paid to your company, which repays the bank. Your company then repays us through a defined exit, such as a refinance with a bank in the names of the people who remain, or the sale of a property.
What does and does not end a director's guarantee
A director's guarantee is a promise you made personally to the company's lender: if the company does not pay, you will. That promise stays in place when your role in the company changes. As Sun Lawyers puts it in its guide to personal guarantees in New South Wales: "Selling your shares or resigning as director does not release you."
The same is true when the business is sold or a new partner comes in. The lender's rights under the guarantee are set by the guarantee document, not by the company's share register or its list of directors. If the guarantee is worded to cover future debts, you can remain liable for borrowing the company takes on after you leave.
This is why law firm and broker guides on the subject say the same thing: get a written release from the lender. The harder question is what the lender will want before it signs one.
What the bank has to do, and what it does not
If the lender is a bank that subscribes to the Banking Code of Practice, effective from 28 February 2025, the Code sets out a guarantor's options. Its guarantee section applies where you guaranteed a loan to an individual or to a small business, which the Code defines as a business with annual turnover under $10 million, fewer than 100 full-time equivalent employees, and less than $5 million in total debt to all credit providers.
The Code gives a guarantor three options.
Limiting the guarantee
You can write to the bank asking to limit the amount you have guaranteed, under paragraph 116. The bank does not have to accept a limit that would not cover what the company already owes under the loan.
Withdrawing from the guarantee
Under paragraph 122, you can withdraw only before the bank first provides credit under the loan, or afterwards if the loan you signed differs in a material way from the proposed loan the bank showed you before you signed the guarantee. For most directors, years into a facility, neither applies.
Ending the guarantee
Paragraph 123 is the one that matters to a departing director. You can end your liability by paying the bank the lower of the company's outstanding debt or the limit of your guarantee, or by "making other arrangements we agree to in return for releasing you from your guarantee."
Read together, the Code gives a guarantor a right to pay, not a right to be released. If you do not want to pay the debt yourself, and the bank does not agree to another arrangement, the practical route to a release is the company repaying what it owes the bank.
The three ways a release happens
1. The company repays the facility
Once the company has repaid what it owes the bank, there is no debt left for the guarantee to cover, and you can ask the bank for a written discharge. This is the only route that does not depend on the bank's agreement to a new arrangement, which makes it the one your company can plan around a fixed date.
2. The bank accepts a replacement
The bank may agree to release you if someone else takes your place, for example the remaining director as sole guarantor, or a different property as security. Whether to accept the replacement is the bank's decision, made on the bank's timetable rather than the date in your exit agreement.
3. The bank agrees to release you as things stand
A bank can agree to release a guarantor while the debt is still owing. It is the bank's decision, and broker Integrated Finance Group, in its July 2026 guide to directors' guarantees, says early release happens only with the lender's written agreement.
Repaying the facility with a short-term private loan
When the bank will not release you until the debt is repaid, and the people who remain cannot yet refinance with a bank on their own, a short-term private loan can repay the facility now. Your company is the borrower, and the loan funds are paid to your company, which uses them to repay the bank facility in full. Where that repays everything the company owes the bank, there is no debt left for your guarantee to cover.
Our loan is secured by a first or second mortgage over residential, commercial or industrial property. That can be the company's own commercial or industrial property, the home or investment property of a director who is staying, or property held by an existing company or trust. It does not have to be the departing guarantor's home, which is often the point of the exercise.
| Loan feature | Detail |
|---|---|
| Borrower | Your company, including a company acting as trustee |
| Loan size | From $250,000, with larger loans assessed case by case |
| Interest rate | From 9.7% p.a., and from 11.95% p.a. for a second mortgage |
| Term | 1 to 24 months, typically 3 to 6 months |
| Security | A first or second mortgage over residential, commercial or industrial property |
| Maximum loan-to-value ratio | 70%, combined with any existing first mortgage where ours is a second mortgage. A second property can be added within the same 70% |
| Repayment | Your company repays us through a defined exit, such as a bank refinance in the names of the remaining owners, or the sale of a property |
Every loan needs that exit agreed before settlement. The most common one in a director's exit is a bank refinance once the remaining owners have the financial statements, the time and the credit history a bank wants to see, which a term of a few months gives them. Our business loan refinancing page explains how we assess a refinance: we look at the property and how the loan will be repaid.
Where the release is part of buying out a partner, the same loan can also fund the payment to the departing partner, as our page on urgent loans for a business partner buyout explains. Where it is part of a separation, our page on private finance for divorce and family settlements covers settlement payments. In both cases, if an agreement or court order sets a date by which a guarantor must be released, that date is the one the loan is planned around.
What to have in writing once the bank is repaid
Repaying the loan does not, by itself, give you a document showing you are released. Integrated Finance Group makes the same point: when a company moves its debt to a new lender, the old lender needs to discharge the guarantee formally, in writing.
Ask for a discharge that covers every facility
An all moneys guarantee covers everything the company owes that lender, now or in the future, according to the Sun Lawyers guide. If the company has an overdraft, a credit card or an equipment loan with the same bank as well as the term loan, repaying only the term loan can leave your guarantee covering the rest. Ask the bank for its payout figure on every facility it has with the company, and for a written discharge of your guarantee that is not limited to one loan.
Ask for the mortgage over your home to be discharged
If you gave the bank a mortgage over your own home to support the guarantee, it stays on your title until the bank discharges it. Ask the bank to prepare a discharge of that mortgage alongside the release of the guarantee, so both are dealt with when the facility is repaid.
Keep the letters
Keep the bank's written release and the registered discharge of mortgage with your personal records. They are the documents that answer any later claim that the guarantee still applies.
We are a lender, not a law firm. Your lawyer should read your guarantee, check any all moneys clause, and draft the release terms in your exit agreement, share sale or property settlement.
Frequently asked questions
I resigned as a director. Am I still on the guarantee?
Yes, unless the lender has released you in writing. Resigning or selling your shares does not change the guarantee document, and if it covers future debts you can remain liable for borrowing the company takes on after you leave.
Can the bank refuse to release me?
Yes. Under the Banking Code of Practice, a guarantor can end a guarantee by paying, or by another arrangement the bank agrees to. If the bank does not agree to an arrangement, the practical route to a release is repaying the company's debt to the bank.
Does my house have to stay on the company's loan?
No. Once the company's debt to the bank is repaid, you can ask the bank to discharge its mortgage over your home. Our loan to your company can be backed by a different property, such as the company's commercial or industrial property or the home of a director who is staying.
Can the company refinance before the remaining director qualifies with a bank?
Yes. A short-term private loan can repay the bank facility now, and the company then refinances with a bank once the remaining owners qualify, or repays us from the sale of a property. The exit is agreed before the loan settles.
How Secured Lending Can Help
If you want to step away from your company's bank loan, or your company needs to release a director by a fixed date, we would be glad to help. Our loan gives your company the funds to repay its bank facility in full, so you can ask for your written release and the discharge of any mortgage over your home. Your company then repays us through a defined exit, such as a bank refinance in the remaining owners' names or a property sale.
A private loan suits this problem because the date in an exit agreement or property settlement does not wait for a bank to reassess the facility. We lend our own funds and our in-house team values the property, so in most cases we can tell you within hours whether we can proceed, we issue a letter of offer as soon as terms are agreed, and we can settle within 24 hours.
We provide secured loans backed by real property. If you would like us to look at your company's situation, it helps to have these to hand:
- •The bank's current statement or payout figure for each facility the company has with it.
- •The date your exit, share sale or property settlement is due.
- •The property that could back the loan, with its estimated value and any existing loan on it.
- •Who is leaving the business and who is staying.
- •How your company plans to repay the loan, and roughly when.
You are welcome to call us on 1300 795 175 to talk it through, or send the details through and we will come back to you.
