How to protect your assets when you take out a personal guarantee
Signing a personal guarantee is often a prerequisite to securing personal finance but are you prepared if something goes wrong?
Many lenders require company directors to sign a personal guarantee in order to secure business finance. This means that, should the business become unable to pay for any reason, the guarantor is personally liable to pay for the lease or loan obligations from their personal assets; including legal fees, interest and otherwise.
What’s at stake?
Personal guarantees are often not tied to one particular asset, so if the business fails to make the payment to the lender, they will contractually be able to recover the funds from the director’s personal estate. Unfortunately, this means as well as your finances, your home, car and other assets could also be at risk.
Why is it necessary?
Many lenders require directors to sign a personal guarantee as it demonstrates that they are willing to stand behind their business. After all, if they’re not willing to put their personal finances at stake for their own business, then why should the lender? It also gives them the assurance that if your business becomes insolvent or bankrupt, they will still be able to recover the funds they are owed.
As a company director, signing a personal guarantee is a daunting prospect, especially as some also require your spouses to sign the contract. Whilst you have full confidence and faith in your business, it can be impossible to predict what’s around the corner and the financial impact of meeting the shortfalls on business finance following insolvency can be devastating, to say the least. Our Personal Guarantee Insurance can help protect and support you in such times.
How it works
amb has teamed up with Purbeck, specialists in Personal Guarantee Insurance, to offer our customers the assurance you need to invest in the future growth of your business. With an insurance policy that can cover up to 80% of the value of your Personal Guarantee, you can rest assured that if your company does go into insolvency, you will have cover in place to safeguard your personal finance. This policy is available for capital, asset and property finance and can cost as little as £14 a month per £10,000 of cover. It can even cover for multiple guarantees on your policy if you have two or more guarantees in place.
To find out more about Personal Guarantee Insurance, contact the team at amb today on 01782 740044 or visit our webpage.