Discover the importance of financial well-being for maintaining a thriving business, and how personal guarantee insurance can mitigate bankruptcy risks.
Financial well-being and stability are indispensable for business owners.
It enables you to focus on the growth of your business instead of survival, allowing you to seize new opportunities and concentrate on long-term planning instead of financial concerns such as defaulting on business loans and bankruptcy.
That’s why taking proactive measures to safeguard your personal and company finances is essential.
In this blog, we’ll explore how personal guarantee insurance (PGI) is an invaluable tool for maintaining a thriving, resilient business.
What are the risks of company bankruptcy?
The business landscape is unpredictable, and while no one wants to sit and think about what could go wrong, unforeseen circumstances, such as global events, changes in market demand or unsuccessful strategies can all present financial challenges.
Not only does this have a significant impact on your business, with the potential of insolvency, but as a business owner, it can also affect your personal finances, especially when a personal guarantee is involved.
For some businesses, especially SMEs, signing a personal guarantee can be the ticket to securing crucial funding. However, it presents a huge risk to business directors and owners who have used their assets, including savings, property and possessions, to secure the guarantee.
In the event that a business fails to meet its financial obligations, these assets can be seized to satisfy any outstanding debt.
In recent years, UK businesses have had to face numerous challenges, with events such as the Ukraine-Russian war and the cost-of-living crisis impacting the UK economy and increasing the chances of insolvency.
The success of your business and your financial well-being can feel like factors beyond your control. Fortunately, there are measures you can take to mitigate these risks and protect your financial stability.
Proactive measures to mitigate business financial risks
Diversification
Ensuring you have a diverse business model that includes multiple income streams, selling a broad customer base, or having various product offerings are effective methods for protecting your business. It means that if one avenue fails, you have alternatives that will allow you to stay in operation, preventing disaster for your overall business.
Emergency funds
An emergency fund is a great way to ensure financial security and reduce the impact of adverse effects either from factors outside your control, such as the economy, or business decisions like underperforming investments.
Strong business strategies
Having solid business strategies in place allows you to identify potential risks, plan for these scenarios and develop contingency plans.
They also allow your business to be adaptable, allowing you to pivot to meet new opportunities or adjust to market changes.
What is personal guarantee insurance?
PGI is a policy designed to safeguard guarantors by ensuring their personal financial stability is not directly threatened by business liabilities. It covers a percentage of the value of the assets they have used to secure the personal guarantee, allowing them to secure funding and invest in their business with peace of mind, knowing their savings, property, or possessions are protected.
It’s a vital safety net that enables you to focus on running and growing your business without the threat of personal financial disaster.
What are the benefits of personal guarantee insurance from Purbeck
Aside from protecting your assets, there are numerous advantages of PGI, including:
Flexible policies
PGI is available for both new and existing policies, which means if you have concerns about the stability of your business’s finances and the risk to your assets under your current agreement, you can secure PGI to mitigate your personal risk.
Enhances business credibility
Securing PGI not only protects your personal liability, but it also improves your business credibility, demonstrating to lenders and investors that you are taking proactive steps to manage risk, which fosters confidence in your business.
Why choose Purbeck?
At Purbeck, we understand the financial pressures that business owners and directors face.
As the UK’s leading providers of PGI, our policies are designed to promote financial well-being, covering up to 80% of the value of the assets you have used to secure your personal guarantee.
Choosing a provider for PGI is a significant decision that can have an enormous impact on you and your business, so you need to know that you’re in safe hands. Our clients can rely on us for:
- Policies you can trust, backed by Markel International Insurance Company Limited
- A rated insurance services, as rated by A.M. Best (A), Fitch (A+) and S&P (A) with practices authorised and regulated by the Financial Conduct Authority and the Prudential Regulatory Authority
If you have any further questions about our policies or would like to ensure your financial well-being today, don’t hesitate to contact our support team. We’re on hand to answer your questions.
