In the past year, the number of UK business owners insuring their personal guarantees (PG) has surged by 16%, according to new industry data. With average SME loan sizes climbing to almost £290,000, it is clear that entrepreneurs are borrowing more and taking greater personal risks to fund their growth.
When a director signs a personal guarantee (PG), they are effectively pledging personal assets as security for a business loan. It is the lender’s way of saying, “If you believe in your business, prove it. Put your money where your mouth is.”
For many businesses, it is the only way to access unsecured finance. But it also means the line between business and personal risk becomes dangerously thin if the company ever runs into difficulty.
That is where Personal Guarantee Insurance (PGI) steps in. This increasingly popular protection is helping business owners sleep better at night, knowing their personal assets are safeguarded if the unexpected happens.
What Personal Guarantee Insurance (PGI) Actually Covers
PGI is a specialist insurance policy that protects company directors and business owners who have signed a personal guarantee in support of a business loan, lease, or asset finance facility.
In the event that the lender enforces the guarantee, typically following insolvency or loan default, the insurance covers a percentage of the director’s personal liability.
Typical policy features include:
Cover of up to 80–90% of the guaranteed amount
Support desk access offering mediation and negotiation if a lender begins enforcement proceedings
Flexible terms often renewed annually to match the lifespan of loans or overdrafts
This means if a director personally guarantees £150,000 and the insurer covers 80%, they would only be liable for £30,000 instead of the full amount. That can make the difference between financial recovery and personal ruin.
Why PGI Uptake Is Growing Among UK Businesses
The sharp rise in PGI uptake this year is not surprising. Business owners are operating in a high-cost, high-risk environment:
Inflation and higher interest rates have increased borrowing costs. You can read our latest article about inflation and how it weakens your business pound for more insight.
Secured finance is harder to obtain without additional personal backing, and younger business owners are increasingly locked out of traditional security options. Many do not yet own homes to use as collateral, even when their businesses are generating several million pounds in annual revenue. With property prices at record highs, a growing tax burden, and a cost-of-living crisis that has eroded personal savings, access to property-backed borrowing is more limited than ever. This leaves higher-cost unsecured borrowing as the only viable route for many.
Post-pandemic loan structures have also reshaped expectations. During the pandemic, government-backed schemes such as CBILS and Bounce Back Loans temporarily removed the need for personal guarantees, allowing businesses to access significant funding without personal liability. That period created a false sense of normality. Now that those schemes have ended, the return of personal guarantees represents a correction back to standard market practice.
For many directors, this shift feels uncomfortable. They can now borrow less money than they could during the government-backed era, and they are once again being asked to personally underwrite their company’s debt. For some, that is a shock to the system, especially if they built their business during a time when PGs were not required.
Against this backdrop, Personal Guarantee Insurance (PGI) has become a logical next step. It allows directors to accept a PG as part of the lending process while protecting their personal assets and financial wellbeing.
A leading UK provider of PGI reports that more business owners are seeking cover for loans exceeding £250,000, while even smaller firms borrowing between £50,000 and £150,000 are beginning to recognise the personal exposure involved.
Every Guarantee Feels Large to Its Signatory
While PGI has become more accessible, it still tends to serve directors with larger borrowing exposures. Policies are structured around higher-value limits, with soft minimum thresholds below which cover is rarely viable.
In practice, PGI products are designed for guarantees linked to secured or unsecured loans in the £50,000 to £550,000+ range. For secured lending, policies typically insure up to £550,000 of a director’s liability at a flat 80% cover, while for unsecured borrowing, cover scales from 60% in year one to 70% in year two, and 80% from year three onwards. Premiums can be paid annually or monthly, and every policy includes unlimited access to a specialist Business Support Service to help negotiate with lenders if repayment issues arise.
These structured tiers reflect real underwriting economics. Insurers need a sufficient guarantee value to justify the risk assessment and claims infrastructure, which makes micro-loans or small working capital facilities harder to insure.
But this is exactly where the gap lies.
For a small business owner, a £1,000 or £10,000 guarantee can feel just as daunting as a six-figure one. It might represent the last of their savings, their family’s emergency fund, or simply a level of personal risk they are not equipped to shoulder. Yet these smaller directors are the ones least likely to qualify for protection.
At Finspire, we believe this is a structural blind spot in the market. If the purpose of PGI is to encourage responsible borrowing and fairer risk sharing, then the product must evolve to include micro and early-stage businesses as well.
Until that happens, the role of brokers and advisers is to bridge that gap. We can help business owners understand where their exposure lies, what forms of mitigation are available, and how to prepare for PGI eligibility as they scale.
If this affects your business borrowing, speak with us. We can structure your debt in a way that makes you feel more secure and ensure you are fully informed about every risk involved before you sign a personal guarantee.
Typical PGI Coverage
| Secured Loans | Unsecured Loans | |
|---|---|---|
|
Policy term: |
Annual Policy |
Annual Policy |
|
Details of cover: |
Cover is based on fixed percentage: – Year one onward: 80% |
Cover is based on fixed percentage: – Year one: 60% – Year two: 70% – Year three onward: 80% |
|
Payment terms: |
Annual or monthly payment options available. |
Annual or monthly payment options available. |
|
Maximum level of coverage: |
£550,000 (for larger coveerage, contact us for bespoke facilities) |
£400,000 (for larger coverage, contact us for bespoke facilities) |
New PGI Products Are Emerging to Match Market Need
The leading PGI provider in the UK recently launched an innovative policy for professional landlords, reflecting a trend towards greater protection for property-backed businesses.
Professional Landlord PGI, key features:
Covers up to £400,000 of a personal guarantee
Available for mortgages up to £2.5 million and 75% LTV
Provides 80% indemnity if a lender calls on the guarantee
Includes access to a specialist support desk to assist with negotiations or settlements
Renewable annually, with flexible cover terms
This evolution of PGI products is important because it mirrors how the market itself is changing. Many landlords are shifting property portfolios into limited company structures (SPVs) to gain tax efficiency, yet this move also introduces personal guarantee exposure on company buy-to-let mortgages.
PGI offers a cost-effective solution to that risk, allowing landlords to preserve the benefits of corporate ownership while protecting their personal finances.
However, this shift also highlights a wider industry imbalance. Appetite for PGI is increasingly centred around larger, property-backed transactions, where premiums and exposures are higher. Meanwhile, smaller business owners (often those who would benefit most from protection) still struggle to access comparable cover.
At Finspire, we can assist on these larger structured transactions, but we are equally committed to pushing for more inclusive support for smaller businesses. Every director who signs a personal guarantee deserves a fair opportunity to protect what they have built, regardless of the loan size.
Real-World Scenarios: How PGI Makes the Difference
Case 1: Education Sector Expansion
A private school sought £6 million in funding to expand its facilities. The director’s guarantee exposure was set at 10% (£600,000). With PGI in place, they secured the loan with the confidence that their family home was not at risk.
Case 2: Coaching and Training Business Under Pressure
When a sales training firm defaulted on a £725,000 secured loan, the lender pursued the director for £145,000 under a personal guarantee. Thanks to PGI, a negotiated settlement reduced that liability to £50,000, with £40,000 paid directly by the insurer. The director personally contributed just £10,000, avoiding bankruptcy and safeguarding personal assets.
These examples show that PGI is not theoretical. It is actively saving directors from serious personal loss.
Which Businesses Can (and Cannot Yet) Access PGI
Most PGI providers now cover guarantees linked to:
Unsecured business loans and asset finance
Commercial mortgages and buy-to-let lending
Refinance or expansion capital
Invoice and trade finance facilities
However, there are still gaps in availability. Smaller businesses, particularly those borrowing below £25,000–£50,000, often find PGI harder to obtain due to minimum premium requirements, underwriting costs, and the general limited availability of credit facilities at these levels.
This creates an ironic situation. The directors least able to absorb a financial hit are often those least able to access protection.
At Finspire, we advocate for broader inclusion, because every guarantee matters. The industry must evolve so that protection is not just a tool for larger firms but a standard safety measure for all entrepreneurs.
How to Explore PGI Options for Your Business
If you have signed, or are about to sign, a personal guarantee on a loan, it is worth exploring what cover is available.
Finspire works with the UK’s leading provider of Personal Guarantee Insurance to offer tailored solutions for company directors, landlords, and investors. We can:
-
Compare cover options across loan types
-
Estimate premiums based on your exposure
-
Liaise with underwriters on your behalf to secure approval
-
Integrate PGI protection into your wider business finance strategy
Frequently Asked Questions About Personal Guarantee Insurance (PGI)
Personal Guarantee Insurance (PGI) is a specialist policy that protects company directors who have signed a personal guarantee for a business loan, lease, or asset finance agreement. It covers a large percentage of the director’s liability if the lender enforces the guarantee following default or insolvency.
When you take out a PGI policy, you agree to pay an annual or monthly premium. If your business cannot meet its loan obligations and the lender calls on your personal guarantee, the insurer pays a significant portion of the liability directly to the lender, reducing your personal financial loss.
Most policies cover up to 80% of your personal guarantee for secured loans and between 60% and 80% for unsecured borrowing, depending on the policy duration and your business track record.
PGI can be used for a range of business lending, including:
Unsecured term loans
Asset and equipment finance
Invoice finance and trade finance
Commercial mortgages
Buy-to-let or SPV property lending
Refinance or growth capital
PGI is available to company directors, partners, and business owners who have provided a personal guarantee in support of a business finance facility. Most providers require the borrower to be a limited company or LLP registered in the UK.
Yes, but access can be more limited. Policies are typically structured for guarantees above £25,000–£50,000, as underwriting smaller guarantees is often not commercially viable for insurers. However, Finspire can consult on alternative ways to manage risk for smaller loans or micro-businesses.
Rising borrowing costs, higher loan values, and limited access to secured finance mean more directors are exposed to personal liability. At the same time, awareness of PGI has grown, and many business owners now see it as an essential safeguard, similar to key person or professional indemnity cover.
If your business defaults and the lender enforces your guarantee, PGI pays a large percentage of the guaranteed amount directly to the lender. This limits how much of your personal wealth or property can be claimed against and helps prevent bankruptcy or repossession.
Most policies are annual and renewable, aligning with the term of your business loan or facility. You can renew each year for as long as your loan or guarantee remains active.
If the lender demands repayment under your personal guarantee, you must notify your insurer immediately. The insurer’s business support team will help negotiate with the lender and may settle part of the liability on your behalf, depending on your policy terms.
Some policies can extend to cover multiple guarantees, especially when a director is backing several related facilities. Always check with your broker to ensure all guarantees are disclosed and covered.
In some cases, yes. PGI premiums may be treated as a legitimate business expense, though directors should seek advice from their accountant or tax adviser before claiming relief.
Yes. Most insurers allow you to take out PGI after the guarantee has been signed, provided no claim or enforcement action has already begun.
PGI will not pay out if the director has acted fraudulently, provided false information, or deliberately caused the business to default. Policies also exclude any guarantee calls made before the policy start date.
For secured lending (such as property-backed loans), PGI typically provides flat 80% cover for the duration of the loan. For unsecured lending, cover often starts at 60% in year one, increasing to 70% in year two and 80% thereafter to reflect the business’s trading history and risk profile.
Most policies can be set up in just a few days. Once underwriting checks and documentation are complete, cover can usually be activated within five working days.
