When losing your business doesn’t mean losing your home!
Losing your business because of cashflow problems is traumatic. Losing your home as a result of personal guarantees being called in by the bank or finance company can be even worse, wrecking lives and relationships.
What happens when a business takes a downturn, for instance when a major client fails to pay an invoice, or new enquiries dry up? Or when you are unable to continue paying the monthly fees on your invoice finance, trade finance or asset finance deal?
Every year, business owners face up to these devastating events, having taken out a commercial mortgage or loans to perhaps buy equipment or employ more staff.
To help mitigate this situation, Personal Guarantee Insurance might be appropriate to add to your to your business insurances…
Personal Guarantee Insurance (PGI) provides insurance cover for those who have signed a Personal Guarantee on a new, or existing loan. Usually signed by a company director, this means that the loan is guaranteed by the individuals personal assets, commonly a house.
The policy enables Directors to claim a significant proportion of the amount called in by the lender under the personal guarantee following the insolvency of the business, significantly limiting the impact on a Directors’ personal estate.
For Example;
• A secured loan of £100,000 is covered by a premium of £2,500. If the business becomes insolvent and £50,000 is left on the loan, a maximum £10,000 is payable by the guarantor director. Considerably more palatable than having to pay back the full amount.
• An unsecured loan of £200,000 is covered by a £5.000 premium. If the business becomes insolvent, the insurer provides the additional benefit of an unsecured loan specialist to negotiate the outstanding amount, with the director contributing 40% of that sum to the lender.
Subject to credit verification, premiums can be paid by the company in installments, and are allowable against Corporation Tax (clients are advised to contact their accountants to make them aware of the payments).
For a personal quotation, contact Morpheus Insurance Solutions, tel: 01233 712812, or email info@morpheusinsurance.co.uk.