Purbeck Insurance Services welcomes UK government advice highlighting Personal Guarantee Insurance
For the first time, the UK government has suggested business owners consider Personal Guarantee Insurance (PGI) as a way of protecting themselves when accessing finance. Purbeck Insurance Services, the UK’s only specialist provider of Personal Guarantee Insurance, says the guidance reflects the growing exposure faced by small business owners, particularly at a time when access to finance increasingly comes with personal risk attached.
The advisory, published by The Insolvency Service, outlines the risks associated with signing a personal guarantee (PG) and explicitly highlights the availability of personal guarantee insurance to help safeguard directors’ personal assets if a guarantee is called in.
Todd Davison, managing director of Purbeck Insurance Services, said: “We welcome this new UK Government guidance encouraging business owners to better understand personal guarantees and to utilise personal guarantee insurance. One in three SME loans today has a personal guarantee in place, and worryingly, 36% of those loans are taken out simply to provide working capital to keep the business afloat. Small business owners are being asked to shoulder greater personal risk than ever before.
“Early-stage firms, in particular, face the steepest personal guarantee requirements relative to their resources, often putting their homes, savings and personal finances on the line just to secure funding. Personal Guarantee Insurance exists to protect directors if a lender calls in their guarantee, safeguarding personal assets while still allowing entrepreneurs to access the finance they need to survive and grow.”
Personal guarantees are legally binding commitments that make directors personally liable for business debts if their company cannot meet its obligations. They are commonly required by lenders, landlords and suppliers, especially where businesses have limited trading history, weaker credit profiles or are seeking larger sums of finance.
Purbeck Insurance Services says the UK government’s decision to reference personal guarantee insurance marks an important step in improving understanding and transparency around PGs.
“This is a clear signal of the government’s pledge to help businesses better understand personal guarantees,” added Davison. “By boosting mainstream awareness of Personal Guarantee Insurance as a legitimate and responsible protective option, business owners can make more informed decisions and manage risk with greater confidence.”
Personal Guarantee Insurance provides directors with financial protection if a lender enforces a personal guarantee, helping to cover the guaranteed amount and reduce the impact on personal assets, while supporting continued access to vital business finance.