Why Half the Small Business Owners Are Buying Insurance to Hide Their Personal Guarantees
Picture this: you’re a small business owner, you need a loan, but you don’t want the bank asking you to sign a personal guarantee that will put your hard‑earned savings at risk. In October 2023, a staggering 60% of business owners turned to Personal Guarantee Insurance (PGI) to dodge that scary clause. Big banks have tightened their purse strings, pushing entrepreneurs into the alternative lending arena where personal guarantees have become the new norm.
Who’s Buying PGI?
- Entrepreneurs who understood the risk of signing on personal assets but still needed cash.
- Small businesses that were taking insurance as a shield before accepting a loan that required a personal guarantee.
- Companies that read the rising trend and thought, “Hey, I can protect my savings just in case.”
What’s the Story Behind the Numbers?
Purbeck Personal Guarantee Insurance says the demand for PGI has skyrocketed—unseen in all their six years of operations. Todd Davison, Managing Director, shrugged and said:
“In the six years we’ve been running this business, we’ve never seen a surge like this. It’s a sign that getting a loan without a personal guarantee is getting trickier than ever.”
Key points:
- Most loans—47%—were for working capital to keep the business afloat.
- This jumps from 37% in Q3 2022.
- When the loan routes narrow, getting sound advice from a commercial finance broker becomes vital.
- Longer‑term loans used to pay short‑term obligations can spiral into debt—and eventually, in the worst case, insolvency.
Bottom Line
Think of PGI as a digital umbrella for your personal assets—you still dance in the rain of financing, but you’re covered when the storm hits. If you’re running a small business and eyeing a loan, consider reaching out to a broker. It’s like having a seasoned personal trainer that knows the best moves to avoid the pitfalls of debt.
Get real‑time updates directly on your device—subscribe, and never miss the next big trend in business financing.
