What is a Personal Guarantee?
A personal guarantee is an agreement where the business owner pledges their personal assets as collateral to secure a loan or line of credit for their business. This means that if the business is incapable of making repayments, the owner will be responsible for covering the costs using their personal assets
It’s common for fledgling businesses to require financing to cover the costs of:
- Start-up expenses such as inventory and new equipment
- Operational costs, like rent and utilities
- Fluctuating cash flow
- Marketing and promotion, such as advertising and campaigns
A personal guarantee is one of the most effective ways to gain access to this crucial funding. By providing lenders with the assurance that their personal assets are at stake, business owners increase the likelihood of loan approval
What is Personal Guarantee Insurance?
Personal Guarantee Insurance is an annual insurance policy that provides insurance cover for Personal Guarantees provided by Directors of Limited Companies in support of business loan facilities. If the company enters insolvency, the Policy steps in and pays a set percentage of the PG commitment directly to the lender
Asset Finance, Invoice Finance, Property Development, Business Finance, Overdrafts, Commercial Mortgages and Property Bridging
Premiums are based on the financial strength of the Limited Company the following aspects are considered by underwriters: Shareholders funds, directors experience, lender, cashflow, profitability and trade sector
What does the Insurance Policy provide?
- 80% cover for PGs signed in support of secured finance
- 60% cover in the first year for PGs attached to unsecured finance, rising to 70% in year two, then 80% in year three and thereafter
- A maximum level of cover of £400,000 for secured loans and £300,000 for unsecured loans
- Unlimited access to the Business Support Service which provides invaluable support during financial difficulties.
- £10,000 cover for a professional debt negotiator to arrange settlement with the lender
- Cover for multiple Directors on one Policy at no extra cost if the PG is signed on a joint and several liability basis
- Cover for multiple guarantees on one Policy
What cover can you get?
The level of cover available is subject to whether the Personal Guarantee is attached to a Secured Business Loan or an Unsecured Business Loan, shown as follows:
- Secured Business Loans: (insurance available up to £400,000) 80%
- Unsecured Business Loans: (insurance available up to £300,000) 60% year one 70% year two 80% year three and thereafter
The policy also includes up to £10,000 of Personal Guarantee negotiation fees under the Demand Mitigation Response Service. For peace of mind in 5 easy steps, click the link below
www.csp.purbeckinsurance.co.uk
Key Features:
Competitive premiums and cover available across a wide range of business loans
Insurance available for:
1. Existing or new Personal Guarantees
2. Multiple Personal Guarantees
3. One or more guarantors
Unlimited access to Business Support Services; a group of specialist advisors who are at your side should your business need support
Full quotation in minutes using the online quote and buy system or via telephone with one of their specialist advisors
The Insurance is provided on behalf of Purbeck Insurance and the policy is insured by Markel International, an A-rated leading insurer within the SME Market
To discuss the options available to you, get in contact with one of our specialist finance brokers today for a free consultation
