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Securing finance is often a necessary step in growing a business. Whether you are expanding premises, investing in equipment or strengthening cash flow, lenders may ask directors to provide a personal guarantee. In simple terms, that means if the business cannot repay the borrowing, the individual guarantor becomes personally responsible for the debt.
For many business owners, particularly in sectors such as care where margins can be tight and funding requirements significant, this can expose personal assets including property and savings. Personal Guarantee Insurance, often referred to as PGI, is designed to help protect against that risk.
Personal Guarantee Insurance is a policy that covers a proportion of the outstanding balance owed to a lender if a personal guarantee is called upon. It does not remove the guarantee itself, but it can reduce the financial impact on the individual who has signed it.
Protection for personal assets
A personal guarantee links business borrowing to personal wealth. PGI helps limit the potential damage to your private finances if the unexpected happens.
Confidence to pursue growth
Access to funding can unlock new opportunities. Knowing that there is a level of protection in place can provide reassurance when making strategic decisions about expansion or investment.
Stronger risk management
No matter how well a business is run, external factors such as economic shifts, regulatory change or market disruption can affect performance. PGI forms part of a broader risk strategy that supports long term resilience.
Support during financial pressure
If a business faces difficulty, the financial strain on directors can be significant. Insurance support can ease that burden, allowing you to focus on stabilising the company or exploring restructuring options.
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Personal Guarantee Insurance is not a substitute for sound financial planning or professional advice. Policies vary in terms of limits, exclusions and eligibility, and not every loan facility will require a personal guarantee in the first place. It is essential to review the terms carefully and seek guidance tailored to your circumstances.
At Quality Care Group, we work closely with business owners across the care sector and beyond. We understand how personal guarantees can affect directors and shareholders, and we can help you explore whether PGI is appropriate for your situation.
If you are considering new borrowing or have already signed a personal guarantee, speak to our General Insurance team for practical, straightforward advice.
