Thus limited, this isn't that much different in Germany. I wasn't really asking about the legal ramifications, but how the banks treat it (and if this incubator does it differently).

Let's say a director of a limited company with a low capital (UK Ltd, German UG etc.) wants to take out a loan on the company. The default risk would be pretty high, and so it's standard practice that the loan contract includes and additional clause that the director is directly liable. Doesn't change the law itself, just an additional contractual obligation.

That's why I'm interested in how the UK banks (and/or this incubator) would treat this. Either they do it the same way, the state takes care of such losses or they're much more eager to accept risks than banks here (which, given recent history, wouldn't surprise me either).

20k GPB for 6% strikes me as rather high, as -- never mind all the aforementioned scrutiny -- getting a loan that high isn't really that much of a deal.

I know nothing of this incubator, but I've heard that banks often ask for personal guarantees. There are various cases I've heard of where the business has failed and people have lost their homes, which were used as guarantee.

It probably comes down to what can be negotiated and I think it's mostly the same as you describe in Germany: Liability is limited unless you agree that it is not.

As a side note, I've had personal experience of one fund which hoped to get back the money given regardless of success or failure. I declined to get involved with them.