What is a Personal Guarantee (PG)?
Firstly what is PG Insurance? To begin with a personal guarantee is a contract by which someone promises to pay any deficiencies on a specific loan or account which cannot be met by the principal debtor.
Secondly most guarantee forms require joint and several liabilities, meaning that each individual who signs a guarantee can be held responsible for the whole amount of the loan.
Thirdly 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.
PG 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 Personal Guarantees attached to the following types of business loan facilities are eligible for cover:
Secured Business Loan
- Asset Finance
- Business Finance
- Commercial Mortgages
- Invoice Finance
- Property Bridging
- Property Development
- Other Secured Loans
- Secured Peer to Peer Loans
Unsecured Business Loan
- Business Finance
- Credit Cards
- Trade Finance
- Unsecured Loans
- Unsecured Peer to Peer Loans
Furthermore the insurance policy provides the Director with unlimited access to a Support Desk which provides proactive advice, assistance and Claims service.
For example the typical per annum premiums are (premiums are subject to IPT at 12%):
• For Personal Guarantees attached to Secured Business Finance: 1.6% – 2.4%
• For Personal Guarantees attached to Unsecured Business Finance: 2.4% – 3.6%
PG Insurance premiums are based on the financial strength of the Limited Company the following aspects are considered by underwriters:
- Shareholders’ Funds (positive)
- Working Capital Position
- Cash Flow and Solvency
- Director Experience
- Financial Ratios
- Days Beyond Term
- Loan Security
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% year one and thereafter
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.
In short the policy can insure up to 5 Personal Guarantees per policy if multiple Personal Guarantees have been signed.
In addition insurance is available for newly signed or historical Personal Guarantees.
Also additional Directors can be included on the insurance policy where the Personal Guarantee has been signed jointly & severally by two or more Directors.
How does Personal Guarantee Insurance work?
Personal Guarantee Insurance is designed to protect you, as a company owner or director, when you take out such a loan, giving you the confidence you need to grow your business.
How to get a quote:
To conclude the insurance policies are backed by a global A-Rated insurer, lifting the weight of responsibility a Personal Guarantee can bring and providing peace of mind for you – as a business owner or director – and your family.
In summary All Star Funding Solutions have partnered with Purbeck Insurance Services, a trading name of Purbeck UK Limited who exclusively offer PG Insurance (PGI) on behalf of Markel International, an A-Rated Fortune 500 insurance company.
Furthermore please be aware that All Star Funding are unable to offer advice on this product.
Finally as members of the Financial Intermediary and Broker Association you can be assured of a great service.