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thank you. The company could offer a debenture in respect of its bank account which is a form of security over the company's bank account but the lender may not be satisfied with this because a bank account balance will and can of course fluctuate over time. The approach of bank would likely take in this scenario would be to ask one or more of the directors to provide a personal guarantee in respect of the loan. This would give the lender access to the relevant directors personal assets including house and any assets they hold in their own name. Of course, this is a risk from the point of view of the director because it means they are personally risking their own assets in guarantee of the loan. This would ultimately be a business decision on the part of each director and it may be a requirement of any director offering security that all of the other directors offer a joint security with them so that the obligation is shared between them
The debenture can take effect as a floating charge. As regards ***** ***** be recommended, it rather depends upon from which perspective the question is asked. From the point of view of US directors, offering a debenture will be preferable because in the event of a default, the creditor will be limited to the assets of the company against which to make a claim. If the question is asked from the point of view of the creditor, then a personal guarantee especially one given by more than one director is likely to be significantly better because not only could they make a claim against the company's assets, but they could also come after one or more of the directors according to who was given the personal guarantee and access personal assets they hold.
Obviously, a personal guarantee is only as good as the person giving it and therefore its value will depend upon effectively the net worth of each of the directors of the company in question.
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