Published
Why lenders ask for independent advice
A lender wants certainty that the guarantee will hold. Independent legal advice, certified by a solicitor who does not act for the borrower or the lender, reduces the risk that the guarantee is later challenged on the basis that the guarantor did not understand it or was pressured into it.
The certificate protects the lender. The appointment is your opportunity to understand what you are agreeing to.
The terms that matter most
Whether liability is capped or unlimited; whether it covers interest, costs and future facilities as well as the current one; whether it is payable on demand without the lender first pursuing the borrower; whether it is joint and several with other guarantors; and what, if anything, allows you to bring it to an end.
If the guarantee is supported by a legal charge, the consequences reach your home rather than your income, and that should be spelled out plainly before you sign.
Questions to ask before the appointment
What is the borrower's actual repayment plan, what happens to the guarantee if you leave the company or sell your shareholding, and whether the lender will accept a cap, a time limit or a smaller share between guarantors.
Those are commercial questions, but the answers change the legal document you are being asked to sign.
This article describes the law of England & Wales in general terms and is not advice on your circumstances.