PGI: The essential cover you didn’t know you needed.

What’s a Personal Guarantee?

In a nutshell, it’s 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 and is commonly used by small business owners.

If, at any point, the business becomes unable to repay this debt 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.

Scary stuff, eh?

We know that you know how risky starting a business is. 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.

What’s Personal Guarantee Insurance?

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.

If you’d like to learn more about PGI and how it may apply to your business, speak to your account manager. Alternatively you can email us on info@venturerisks.co.uk or call us on +44 (0) 330 001 0949.