Personal guarantee insurance for company directors

When a business applies for finance through a limited company or incorporated structure, most lenders will require a Personal Guarantee (PG) from one or more directors. A Personal Guarantee means that if the company is unable to repay its loan, the guarantor becomes personally liable for some or all of the outstanding debt.

This requirement is now standard across business lending, including commercial loans, asset finance, invoice facilities, development finance, and revolving credit lines.

Why lenders ask for personal guarantees

Lenders rely on Personal Guarantees because they provide significant security and reduce lending risk:

Lower Default Rates

Stronger Recovery Options

Negotiation Leverage

In practice, almost all lenders will request Personal Guarantees from directors, and sometimes from shareholders or other connected parties as well.

What is personal guarantee insurance?

Many directors are surprised to learn that they can insure against the risk of their Personal Guarantee being called upon. Personal Guarantee Insurance (PGI) is designed to protect company directors by covering a significant percentage of the amount they could be personally liable for if the business cannot repay its borrowing.

For most directors, a Personal Guarantee is the largest personal financial exposure associated with running their company—making protection an important consideration.

Why consider personal guarantee insurance?

While some advisers suggest never signing a PG, the reality is that many business loans simply cannot be obtained without one. If giving a Personal Guarantee is unavoidable, insuring your exposure can offer a practical and highly effective compromise.

PGI helps directors:

Reduce personal financial risk
Protect personal assets
Gain peace of mind when taking on new finance
Support business growth without unnecessary fear of liability

Our partnership with Purbeck Insurance

To provide directors with a robust solution, we work with Purbeck Insurance, the UK’s leading specialist provider of Personal Guarantee Insurance. Through this partnership, we offer tailored protection for directors taking on new finance or looking to insure existing Personal Guarantees.

Ready to protect your personal assets?

Speak to a specialist today and explore how Personal Guarantee Insurance can support your business decisions.

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Frequently asked questions (FAQ’s)

When a business, typically a limited company or incorporated structure, applies for finance, the lender often requires a Personal Guarantee (PG) from one or more directors. This means that if the company is unable to repay the loan, the director who gave the guarantee becomes personally liable for some or all of the outstanding debt.

Lenders use PGs to provide security and reduce risk. A PG leads to lower default rates, offers stronger recovery options (preventing the company from simply winding up to write off the debt), and provides negotiation leverage to support the business through financial difficulty.

The requirement for a PG is now standard across most forms of business lending, including commercial loans, asset finance, invoice facilities, development finance, and revolving credit lines.

PGI is a specialized insurance product designed to protect company directors. It provides coverage for a significant percentage of the amount that a director could be personally liable for if the business defaults on its borrowing and the Personal Guarantee is called upon.

While some suggest avoiding a PG entirely, many business loans cannot be obtained without one. If a PG is unavoidable, PGI offers a practical compromise by helping directors to:

Reduce personal financial risk.
Protect personal assets.
Gain peace of mind when taking on new finance.
Support business growth without unnecessary fear of liability.

We work in partnership with Purbeck Insurance, the UK’s leading specialist provider of Personal Guarantee Insurance. You can follow the link on our webpage to their quote and buy website, as we do not offer advice or services in this area of insurance.

At present, PGI is typically only available to UK-based borrowers with UK-based risk.