Directors can be placed at risk in the event that a lender calls on their Personal Guarantee. In these cases, having Personal Guarantee insurance can protect business leaders from these risks, allowing them to continue to secure the finance they need to pursue their company’s growth objectives without putting their own estates on the line.
Directors and other individuals can be required, through the course of raising SME finance, to provide additional security to the lender by signing a Personal Guarantee. By signing a Personal Guarantee the personal estate of the Director can be placed at risk.
In some cases, signing a Personal Guarantee can be the difference between securing SME finance or not. Directors are therefore willing to provide a Personal Guarantee to secure SME finance so their business is able to pursue its growth objectives.
Why do you need insurance?
Though signing Personal Guarantees is often unavoidable, and may feel like it carries little to no risk, unforeseen problems can soon cause things to go wrong. In the event of a market downturn, the business failure of a key customer or the failure of a supplier, a business can become insolvent, causing the lender to call on the Personal Guarantee to cover any financial obligations. The amount the lender requires can rise if interest or other costs are added, leading to the signatory losing important assets.
Personal Guarantee Insurance has been designed to give Directors the confidence to focus on their business’s growth objectives without worrying about this risk.
What are the benefits?
- Insurance policy backed by an A-rated leading insurer
- Protects your business from unforeseen problems
- Allows you to balance risk evenly, so that no one person risks being called upon by the lender
- Allows businesses to pursue growth without personal risk
- Flexible policy allows you to choose how much to insure