Funding Amount
Personal Guarantee Insured
Annual Premium
Type of Loan
Development Loan
An experienced group of Directors approached Purbeck seeking cover against a £900k development finance offer by a high street bank to complete the build of two high-end houses using a modern method of construction. This method would allow the company to complete the build in a very short space of time whilst also providing a very energy-efficient structure with low levels of CO2 emissions.
The Directors set up a new SPV to complete the transaction but were put off by the prospect of having to sign a £400k Personal Guarantee in connection with the development finance, the first time they had been requested to do so in 20 years, knowing full well the dangers associated with development; costs overrun, weather delays, impacts to the supply chain, especially during COVID and unforeseen build issues, etc.
The Purbeck underwriters worked quickly alongside insurers to run through the loan offer documents, development plan and valuation report to get a firm understanding of the risk and were able to produce a firm quotation for purchase within 5 working days of receiving the proposal. The Directors completed purchase of the policy 10 days after applying for cover at the same time, they signed the PG and completed the drawdown, providing them with valuable peace of mind so they could focus on the development project.
Interesting facts about the case
-
Despite 20 years of successful developments and never having experienced a Personal Guarantee, or insolvency, the Directors still considered it prudent to protect their personal exposure, especially with the backdrop of broader economic and social uncertainty.
- Personal Guarantees are beginning to feature more heavily within commercial finance due to the withdrawal of the Coronavirus Business Interruption Loan Scheme and Bounce Back Loan Scheme on 31 March 2021 and in response to economic uncertainty caused by COVID/Brexit.
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