The short answer
A guarantee is a promise to pay someone else's debt. If you're already personally liable as the borrower, you can't usefully guarantee yourself — the guarantee adds nothing the bank doesn't already have. So for an individual loan in your own name, the question is moot.
What people usually mean when they ask this question is something different: can I borrow in one capacity and personally guarantee the loan in another? The answer there is yes, and it happens all the time.
Common structures
The most common scenarios where you might appear on both sides of the loan are:
- Company borrower with director guarantee. The company is the legal borrower. The directors personally guarantee repayment. This is standard practice in commercial and small business lending.
- SMSF trustee with member guarantee. The SMSF (acting through its trustee, often a corporate trustee) is the borrower under a limited recourse borrowing arrangement. The individual members usually personally guarantee the loan to satisfy the lender's credit policy.
- Trust borrower with appointor or beneficiary guarantee. Discretionary or unit trusts borrowing in their own right, with one or more individuals personally guaranteeing.
- Partnership with partner guarantees. Where a partnership is the legal borrower, individual partners often give personal guarantees.
In each case the legal personality on the loan side (company, trustee, partnership) is distinct from the natural person on the guarantee side, even when the same human is signing in both seats.
Why banks structure it this way
Banks lend to companies, trusts and SMSFs because the structure offers tax or operational advantages to the customer. But those structures also limit the lender's recourse. A company can become insolvent and leave the bank holding the bag; a trustee may have limited assets behind it.
A personal guarantee solves that. It pierces the corporate veil for the purposes of this one loan, giving the bank access to the director's or member's personal assets if the entity defaults. From the bank's perspective, it's not "the same person twice" — it's two distinct sources of repayment.
Why ILA is almost always required
Personal guarantees are exactly the documents Australian case law was built around. Where someone personally guarantees a company or trust debt, the courts have repeatedly held that the bank must take reasonable steps to ensure the guarantor understood what they signed. Independent legal advice is the standard way to do that.
So even though you may think of yourself as "the borrower" — because in practical terms you control the company that's taking on the debt — for ILA purposes you are signing as a guarantor. The advice meeting focuses on the personal exposure that comes with the guarantee, separate from the commercial logic of the loan itself.
What the meeting covers in this scenario
The structure of the appointment is the same as for any guarantor: identity check, plain-English explanation, walk-through of the document, signing, and certificate. The emphasis is usually heavier on:
- The split between the entity's assets and your personal assets. The solicitor will make sure you understand the bank can pursue you personally even if the company or trust has nothing left.
- Cross-collateralisation and "all moneys" clauses. Many commercial guarantees extend to every debt the entity ever owes the lender, not just this one loan. That's a significant distinction.
- Joint and several liability. If there are multiple directors or members each giving a guarantee, the bank can usually pursue any of them for the full amount.
- Interaction with other personal security. If you've also put up your home as additional security, the solicitor will explain how that fits with the guarantee.
Practical points
A few things to know if you're going through this:
- If there are multiple directors or members, each one needs their own ILA. You can sometimes attend the same meeting, but the certificates are issued individually.
- If you're using your own home as security in addition to giving a personal guarantee, you'll need ILA on both documents.
- If you're also signing as a director on behalf of the company, the solicitor will witness the company execution as a separate step. That doesn't usually require its own ILA, but it does need to be done properly.
Your next step
If you're a director or SMSF member about to guarantee your own entity's loan, book the appointment early — these structures involve more paperwork than a simple home loan, and the solicitor will want time to read it before the meeting. Our SMSF guide goes into more detail on the LRBA structure specifically.