Personal Guarantee Insurance Explained
Grow your business without risking your personal wealth.
Personal Guarantee Insurance gives you the freedom to pursue opportunities while protecting up to 80% of your personal guarantee.
Whether you need secured or unsecured loans, this cover lets you get the business finance you need with peace of mind.
- Protect 80% of your personal guarantee
- Get business loans
- Keep your personal assets safe from business risk
- Secured and unsecured loans
- Business support services at your fingertips
Up to 80% protection available for personal assets pledged under a personal guarantee
What is a Personal Guarantee?
When you need finance for your business, lenders will often ask for a personal guarantee, or PG.
This means you’ll pay the loan from your own pocket if your business can’t. While it can get you access to funding, it also risks your personal assets.
Personal guarantees help businesses get finance while providing security for lenders, and many businesses can’t get money without them.
They’re used for many commercial loans, from asset finance to working capital.
But if your business fails you could lose your home or savings.
How it Works
Personal Guarantee Insurance is a policy you buy, separate to any borrowing, to protect the personal guarantee you’ve signed.
The policy covers a large part of your loan guarantee, up to 80%, if your business becomes insolvent and can’t pay the loan.
For unsecured borrowing, the cover is 60% in the first year and increases to 80% over time as your business becomes more stable.
If your business can’t meet its obligations you must notify your insurer.
They’ll help you through the claims process, often providing expert negotiators to deal with lenders on your behalf. This can reduce your personal financial exposure.
Key Benefits
If you need a personal guarantee to get business finance it shouldn’t mean risking your entire personal wealth.
PG Insurance is a solid solution, protecting up to 80% of your guarantee and allowing you to get the funding your business needs.
Asset Protection
Your home, savings and other personal assets are your financial foundation. Personal Guarantee Insurance protects these assets from business risk.
If your business hits trouble you won’t lose everything you’ve worked for.
This is more than just financial security – it’s peace of mind. You can focus on running and growing your business without worrying about personal financial disaster.
Business Growth
With Personal Guarantee Insurance you can go for business opportunities with confidence.
You can get the finance your business needs to grow, invest in new equipment or take on bigger projects.
Many business owners don’t provide personal guarantees, missing out on growth opportunities. This insurance removes that barrier so you can make bold, informed decisions that will move your business forward.
Peace of Mind
Running a business is stressful. Personal Guarantee Insurance removes one of those stresses – the risk to your personal finances.
This peace of mind is priceless, so you can focus on big picture decisions and day to day operations.
Plus it helps with work-life balance. You can separate your business and personal life more easily, knowing your family’s financial future isn’t tied to your business’s success.
Who Needs Personal Guarantee Insurance?
Business Owners and Directors
If you’re a director of a limited company or a partner in a limited liability partnership, Personal Guarantee Insurance is for you.
It’s relevant if you’ve signed or are about to sign a personal guarantee for business finance.
This insurance is for those who want to protect their personal assets while they grow their business.
It’s for new loans or existing guarantees.
Types of Businesses
Personal Guarantee Insurance isn’t just for big businesses or specific industries.
It’s for:
- Start-ups getting their first big loan
- SMEs looking to grow
- Established businesses needing more finance
Whether you’re a tech start-up, a manufacturing business or a service based business, if you’re providing personal guarantees this insurance can help you.
Get your quote today
Eligible Loans
Cover is available for many types of secured loans, including:
Asset finance
When borrowing to buy equipment or vehicles lenders often require personal guarantees.
Commercial mortgages
Commercial mortgages and loans often require Director guarantees.
Invoice finance
If you’re using invoice finance to manage cash flow, Personal Guarantee Insurance can help you.
Unsecured business borrowing can include:
Business credit cards
High-limit business credit cards often require personal guarantees.
Overdrafts
Business overdrafts provide flexible finance but require personal guarantees.
Working capital loans
Short-term loans for operational costs often require PG’s.
How Much Does Personal Guarantee Insurance Cost?
The cost varies depending on:
- Loan amount and type: Larger loans and unsecured borrowing cost more.
- Business financial health: A healthy financial position means lower costs.
- Guarantor’s credit history: A good personal credit score will reduce the premium.
Your premium will depend on your situation so you get the right cover at the right price. Payments can be monthly or annually.
Interested?
Get in touch today to find out more.
FAQ
Yes, you can insure existing personal guarantees as well as new ones. Whether you’ve just signed a guarantee or have had one in place for years, the policy can provide cover to protect your personal assets.
If your business becomes insolvent, you should contact the insurer immediately. They’ll guide you through the process, providing expert support and initiating the claims procedure. They will work with the lender to negotiate the best possible outcome, aiming to minimise your personal liability.
Absolutely. If multiple directors have signed a joint and several personal guarantee, you can cover all of them under a single policy. This approach often proves more cost-effective and ensures consistent protection for all parties involved.
Policies are designed to reward your business’s stability. For unsecured debts, cover starts at 60% of your personal guarantee in the first year. It then increases to 70% in the second year, and 80% from the third year onwards. This structure reflects the reduced risk as your business establishes a track record of loan repayment.
Secured debts benefit from 80% cover from the outset.
The guarantee will be for the full outstanding debt, plus interest and costs.
No, not at all. It is up to you to decide whether this extra insurance is worth it. Lenders won’t expect borrowers to have PG insurance.
