Quick answer
A lender usually can't proceed if a co-director refuses to sign, because the company has to execute the documents properly and many lenders want every director to guarantee. Start by finding out what they're worried about. Common fixes include capping or removing their guarantee, offering property security from the willing director, borrowing less, or resolving the disagreement through your shareholders' agreement or mediation.
Key points
- Company documents need the right signatures, which usually means more than one director when there are two or more.
- Many lenders ask every director to give a personal guarantee, but that isn't universal.
- Most refusals are about the guarantee, not the loan, so the guarantee is where compromise usually happens.
- Property security offered by the willing director can sometimes replace the other director's guarantee.
- If you're deadlocked, your constitution, shareholders' agreement and a mediator are the next steps, not the lender.
When a co-director won’t sign, a lender usually can’t go ahead, because the company has to sign its documents properly and many lenders want a guarantee from every director. The fix starts with finding out why. Most refusals are about the personal guarantee, and that’s where a compromise is usually found: a capped guarantee, other security, a smaller loan or mediation.
It’s an awkward conversation. You’ve found the finance, the business needs it, and your fellow director says no. Or worse, says nothing and just doesn’t sign. Sometimes it’s a sign of a deeper rift. More often, it’s a reasonable worry that hasn’t been talked through properly.
This guide explains why lenders need every director, what people are usually worried about, and the options that often get a deal over the line.
Why does the lender need your co-director at all?
Two separate reasons, and it helps to keep them apart.
The company has to sign properly. A company acts through its directors. ASIC’s company officeholders guidance sets out who the directors are and what’s required of them, and the ASIC register is what a lender checks. Where a company has more than one director, lenders generally want the loan documents signed by two directors, or a director and the secretary. One director signing alone usually won’t do.
The lender may want personal guarantees. This is a separate document. A guarantee makes the director personally liable if the company can’t repay. Many lenders ask every director to give one, because directors control the business. But it’s a lending policy, not a law, which is why it’s often the part with room to move.
In practice, a co-director who’s happy for the company to borrow but won’t personally guarantee is a very different problem from one who doesn’t want the company to borrow at all.
What are co-directors usually worried about?
| Their concern | What’s really behind it | What often helps |
|---|---|---|
| “I’m not putting my house on the line” | Fear of losing personal assets | Capped guarantee, other security, or a smaller unsecured loan |
| “We can’t afford the repayments” | Doubt about cash flow | Show the numbers; choose a repayment that fits comfortably |
| “I don’t agree with what it’s for” | Disagreement about strategy | Talk through the plan; consider a smaller, staged amount |
| “I’m planning to step back” | Doesn’t want new obligations on the way out | Agree an exit first; consider a buyout |
| “I don’t trust how the money will be used” | A wider breakdown in the relationship | Mediation, clearer controls, or a structured separation |
| Silence | Avoidance, often of conflict | A direct, low-pressure conversation, perhaps with your accountant present |
Our page on secured business loans explains how security changes what lenders ask for, which is often central to resolving a guarantee concern.
Which compromises do lenders sometimes accept?
There’s no guarantee any of these will work with a given lender, but they’re common starting points:
A limited guarantee. Some lenders will accept a guarantee capped at a set amount, or limited to a director’s share of the business, rather than the full loan.
Security from the willing director. If you own property and are prepared to offer it, a lender may accept that in place of, or alongside, a smaller commitment from your co-director. Property-secured business loans run from $20k to $5m. Our home equity business loans page explains how a home can secure a business loan.
A smaller loan. Unsecured or cash-flow options typically run from $5k to $500k, sized on turnover and bank statements. A modest amount may come with lighter requirements and be easier for a cautious director to accept. Our unsecured business loans page covers the basics.
Staging the borrowing. Borrow for the most urgent need now and revisit the rest once the first step has proven itself.
If you’d like to explore which of these might fit your situation, start a 60-second enquiry and mention that one director is hesitant. It changes which options we’d look at first.
What if you’re genuinely deadlocked?
Sometimes no compromise works because the loan isn’t really the problem. The directors disagree about the future of the business. A lender can’t solve that, and shouldn’t try.
The next steps are usually:
- Check your constitution and shareholders’ agreement. Many set out what happens when directors can’t agree, including dispute resolution steps, casting votes, or buy-sell arrangements.
- Get independent advice. A solicitor can explain your options, including whether and how directors can be changed. Removing a director is a serious step with legal consequences, so don’t attempt it without advice.
- Try mediation. A neutral mediator can help two owners find a way forward. The Australian Small Business and Family Enterprise Ombudsman’s dispute support page lists dispute resolution options for small businesses.
- Consider a buyout. If one director wants out, a loan to buy their shares may solve both problems at once. Our partner buyout loans page explains how those are funded.
Illustrative example: two directors of a plumbing company
This is an illustrative example, not a real client. Two directors each own half of a plumbing company. The company needs $120k for a new van and working capital to take on a commercial maintenance contract. One director is keen. The other refuses to sign a personal guarantee, worried about the family home after a friend’s business failed.
They sit down with their accountant, who walks through the contract and shows the repayment fits easily within current cash flow. The keen director owns an investment unit with good equity and offers it as security. The lender agrees to a property-secured facility with the company as borrower, a mortgage over the investment unit, and a guarantee from the keen director only. The cautious director signs the company documents, comfortable that their home isn’t exposed. Our plumbing business loan page covers how lenders view plumbing businesses.
Should you sign a guarantee your co-director won’t?
It’s worth pausing on this one. If your co-director refuses to guarantee and you agree to carry the guarantee alone, you’re taking on the whole personal risk for a business you only half own. That can be the right call, especially if you hold most of the shares or you’re the one driving the plan. But it should be a deliberate decision, not a reflex to get the deal done.
Before you sign alone, consider:
- Whether the ownership split should change to reflect who carries the risk.
- A written agreement between you covering what happens if the guarantee is ever called on.
- Your own independent advice, so you understand exactly what the guarantee covers.
Handled well, one director taking the lead can be a fair outcome for both. Handled badly, it plants the seed of the next dispute.
How do you have the conversation?
Some practical tips that help directors find common ground:
- Lead with the numbers, not the pressure. Show the cash flow, the repayment and the purpose.
- Separate the loan from the guarantee. Ask: “Is it the borrowing you disagree with, or the guarantee?”
- Bring in a neutral voice. Your accountant can explain the risks plainly to both of you.
- Encourage independent advice. A director who’s had their own advice on a guarantee is far more likely to sign with confidence. The free Small Business Debt Helpline on 1800 413 828 can help explain personal guarantees.
- Put agreements in writing, including what happens if one of you later wants out.
Got a hesitant co-director? Let’s find a structure you both can sign
A director who won’t sign isn’t always a dead end. Often it’s an invitation to find a structure that works for everyone, with less personal exposure, different security or a more modest amount.
Tell us about it in an enquiry that takes about a minute. There’s no credit check when you first enquire, and your details aren’t handed around to a pile of lenders, so neither of you will be chased by people you didn’t ask to hear from. A real person reads your situation, including the sticking point, and calls to talk through options. Please answer the form accurately, including how many directors the company has and who’s willing to guarantee, so the first option we discuss is one you can both live with. Our how it works page shows what happens next.
Frequently asked questions
Can one director sign a business loan without the other?
Usually not, if the company has two or more directors. Lenders want the company's documents executed properly, which commonly means two directors, or a director and the company secretary. A sole director can sign alone only where they're genuinely the only director.
Do all directors have to give a personal guarantee?
Not always, but many lenders ask for it. Some will accept guarantees from only some directors, a limited guarantee, or property security instead. It depends on the lender, the loan size and how strong the business and security are.
Why would a co-director refuse to sign?
Usually because of the personal guarantee: they don't want their home or personal assets exposed. Other reasons include disagreeing with what the money is for, worrying about the repayments, or a wider dispute about the business.
Can I remove a director who won't cooperate?
It depends on your company's constitution, any shareholders' agreement and who holds the shares. Removing a director is a significant step with legal consequences, so get advice from a solicitor before trying it.
Where can we get help resolving a deadlock between directors?
A neutral mediator can help, and your shareholders' agreement may set out a dispute process. The Small Business Debt Helpline offers free help understanding debts and personal guarantees, and the Australian Small Business and Family Enterprise Ombudsman lists dispute resolution options.