Switchboard Finance Logo – Director Glossary

Director

A Director is a person legally responsible for managing a company’s operations and making key decisions. Lenders assess directors when approving Business Loans, Equipment Finance, Working Capital Loans, and Low Doc Asset Finance. Directors typically provide personal guarantees, ID verification, and credit checks as part of the loan application. Directors planning bigger moves often map this out via the Business Owners Finance Hub.

Why Directors Matter in Lending

Even though a company is a separate legal entity, lenders rely on directors for accountability and risk management. A director’s financial behaviour, credit score, and governance history affect borrowing capacity.

  • Directors must provide personal guarantees for most company loans
  • Lenders assess director credit history and ID
  • Directors are responsible for company compliance and financial reporting
  • Significant influence over cash flow, debt, and risk decisions
  • Required to authorise loan documents and major purchases

Directors of Pty Ltd companies or Trading Trusts play a key role in lending applications and approvals.

Common Responsibilities of Directors

  • Set company strategy and financial direction
  • Ensure legal and tax compliance
  • Approve finance applications and major contracts
  • Oversee company cashflow and governance
  • Act in the best interest of shareholders

Official reference: asic.gov.au

Do directors always need to give personal guarantees?
Yes — except for large public companies. Most lenders require director guarantees for Pty Ltd companies.
Can a director have bad credit?
Yes, but it may reduce the company’s borrowing capacity or require low doc or specialist lending options.
Are directors personally liable for business loans?
If they sign a director guarantee — yes. If not, liability remains with the company.
Can someone be a director of multiple companies?
Yes — many business owners oversee several companies or trusts.
Do directors need to be shareholders?
No — directors manage the company, while shareholders own it. Many directors are both.