A Personal Guarantee is – in a nutshell – a person’s promise to repay credit issued to their business (they’re usually a director or partner of the business) and is typically signed during the loan application process. It’s a legally binding contract.
Small business owners will often use a Personal Guarantee, as they have a vested interest in the success of their business.
If the business becomes unable to repay this debt at any point, then the individual who has signed the Personal Guarantee may become personally responsible for the debt. The lender may call on the Personal Guarantee to cover any outstanding debts and will go after the guarantor’s personal assets, such as their home. If personal assets don’t cover the debt, the individual could be declared bankrupt.
As we all know, not all businesses succeed and, as a result, not all debt is paid back. The Personal Guarantee is therefore seen as “added security” for lenders.
Few SMEs have enough cash within their organisation to self-fund growth. So Personal Guarantees can be a very useful method of securing crucial business finance that an SME may not have been able to secure otherwise, and could help propel a business forward.
When you, as a business owner or director, sign a Personal Guarantee, you’re essentially putting your personal assets on the line, most notably your home. If your business can no longer repay the loan you took out, you, and potentially your family, could suffer as a result.
This is where Personal Guarantee Insurance comes in. It’s designed to give you the confidence to grow your business through securing crucial finance, and protect your personal assets.
There are many unforeseen circumstances that can have adverse effects on your business and your bottom line, from market downturns and key customers going out of business to suppliers failing in their duty and illness or absence of a key individual within the company.
PGI can be tailored to each individual, so you can state the amount you want to insure, and you can choose how many directors you’d like to be noted on the policy. Purchasing this insurance policy will help to reduce the risk to your personal estate, leaving you to get on with running your business and securing your financial peace of mind.
Personal Guarantee Insurance is available for Personal Guarantees provided by Directors of Limited Companies or Partners of Limited Liability Partnerships located in the United Kingdom.
Personal Guarantee Insurance is available against Personal Guarantees provided against a wide range of business loans:
A secured loan is where the lender has taken a charge over company assets or has a contractual right of recover over a company asset that funds have been lent against in additional to the Personal Guarantee.
Secured loans include:
An unsecured loan is where the Personal Guarantee and any associated charges over personal assets are the only security the lender has taken.
Unsecured loans include:
We are at your side and here to help.
Your business may at any time suffer from any one of a number of financial or trading difficulties. It is important that we are notified as soon as you become aware of any of theses - we call these Notifiable Events.
You need to read your policy carefully to ensure you are aware of all such situations, some examples of Notifiable Events include:
When you make us aware of a Notifiable Event we will introduce you to our Business Support Services.
It is in our interest to support you with any financial issues your business faces. We are committed to working with you to ensure that your business continues to be successful.
The Business Support Service may help you by introducing you to specialist companies in:
The Business Support Service is available to you and not just following a Notifiable Event. Purbeck receive no incentives for introducing you to these services. We believe they will help strengthen your business and they are businesses we trust.
The annual renewal process is simple and straightforward, enabling you to focus on your business. By renewing your annual Personal Guarantee Insurance policy you will ensure that the cover remains in place across the duration of the financial commitments.
30 days prior to renewal, you will be provided with an email link to retrieve your application. You will be asked to confirm your original application details and apply for renewal.
Please note, renewal of your policy will be subject to your circumstances at that time and the insurance may be subject to periodic change.
You will have the opportunity to review the Policy Summary and Key Facts Information prior to purchasing Personal Guarantee Insurance. These documents set out the significant features, exclusion and important information relating to the Policy.
You will have the opportunity to review the Policy Summary and Key Facts Information prior to purchasing Personal Guarantee Insurance. These documents set out the significant features, exclusion and important information relating to the Policy.
If you wish to review the documentation before you apply, please follow the relevant links below:
We can include multiple guarantees on your Policy if you have two or more guarantees in place.
Where the Personal Guarantee has been signed by two or more Directors "jointly & severally" we can include additional Directors on your Policy.
For more information or to discuss your specific requirements, please contact our risk management insurance company today.
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Knowing that the Personal Guarantee Insurance was in place created valuable peace of mind during a very difficult time, but Purbeck also did as much as they could to help us avoid defaulting on the loan.
Purbeck Insurance Services is a trading name of Purbeck UK Limited which is a company registered in England and Wales under company number 10345620 and has its registered office at 20 - 22 Wenlock Road, London, N1 7GU Purbeck UK Limited is authorised and regulated by the Financial Conduct Authority. Firm permissions can be obtained from the FCA register. Purbeck UK Limited is a Managing General Agent and has binding authority to enter into and administer contracts of insurance on behalf of Markel International Insurance Company Limited.