A Personal Guarantee is – in a nutshell – a person’s promise to repay credit issued to their business and is typically signed by director(s) or owner(s) during the loan application process. It’s a legally binding contract.
If the business becomes unable to repay this debt at any point, then the individual(s) 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.
Invest with confidence
Businesses need capital in order to succeed. PGI allows you to take out the loans you need to grow, all while protecting your personal assets.
Protect up to 80% of your loan amount
Cover a significant sum and ensure that this bill doesn’t land at your feet if your business becomes insolvent.
Secure your family’s future
Following insolvency, a demand made under the personal guarantee can have a detrimental impact on your personal assets. Don’t take the risk, find out about how Purbeck can help.
Basic Criteria
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.
Types of loan facilities
Personal Guarantee Insurance is available against Personal Guarantees provided against a wide range of business loans, including both secured loans and unsecured loans.
Secured loans
A secured loan is where the lender has taken security in the form of your company’s assets. They have a contractual right of recovery over your assets in the event that you cannot pay your debts.
Secured loans include:
- Asset finance
- Commercial mortgages
- Invoice finance
- Qualifying peer to peer loans
Unsecured loans
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:
- Credit cards
- Overdrafts
- Peer to peer loans
- Short-term working capital loans
Scope of cover
Notifiable Events
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 these - we call them “notifiable events”.
You need to read your policy carefully to ensure you are aware of all such situations, some examples of notifiable events include:
- You intend to meet with a licensed insolvency practitioner
- You have default on the loan agreement with the lender
- You have reason to believe that the business will enter an insolvency procedure
When you make us aware of a notifiable event we will introduce you to our Business Support Services.
Business Support Services
It is in our best interests 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:
- Business recovery
- Cash flow management
- Credit control management
- Tax credit and deduction advice including R&D and Capital Allowances
- Debt management
- Financial restructuring
- Invoice disputes
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.
Renewals
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.
45 days prior to renewal, you will be provided with an email link to renew 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.
Policy Documentation
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:
Can I insure multiple personal guarantees?
We can include multiple guarantees on your Policy if you have two or more guarantees in place.
Can I have more than one Guarantor?
Where the Personal Guarantee has been signed by two or more directors "jointly & severally", we can include additional directors on your Policy.