How Personal Guarantee Insurance Works

Understanding Personal Guarantees

A personal guarantee is a promise you make to a lender that if your business can't repay a loan, you will - personally. It means your personal assets (your home, savings, car, retirement accounts) can be seized if your business defaults. For SMB owners, it's almost always required when taking out a loan. Most lenders won't lend without it, and all SBA loans required personal guarantees.

Why Lenders Require Personal Guarantees

Lenders require personal guarantees because they're taking on risk. Your business is new or young, and statistics show that small businesses fail at meaningful rates. A personal guarantee gives the lender recourse: if the business fails, they can pursue your personal assets. From their perspective, it's a reasonable ask. From yours, it's a terrifying one.

What PGI Covers

If your business files for bankruptcy and your lender pursues you for the personal guarantee, PGI pays the lender directly— 50% of your guaranteed amount. This happens after:

  • Your business files for Chapter 7 or Chapter 11 bankruptcy

  • The lender has formally begun collection proceedings against you personally via a demand letter

  • We've verified the claim and confirmed the liability

Your payout goes directly to the lender, immediately reducing your liability in half.

Three Simple Steps

  • Apply

    Complete our online application. Tell us about your business, industry, loan amount, and personal guarantee details. Most applications take 10–15 minutes.

  • Get Qualified

    Our underwriting team reviews your information. We may ask clarifying questions. We typically respond within 48 hours with an approval or request for more info.

  • Stay Protected

    Once the loan closes, you approve the terms, and you pay the premium, you're protected. Coverage is effective immediately.

What PGI Does NOT Cover

Important: Please read this carefully. PGI covers personal guarantees on business acquisition loans only. We do NOT cover:

  • Fraud or intentional misconduct by you or your business

  • Guarantees on personal loans, credit cards, or other non-business debt

  • Guarantees made on behalf of other people's businesses

  • Business debt that doesn't go through formal bankruptcy proceedings

  • Claims filed before your policy was active

Transparency matters. We want you to understand exactly what you're buying.

How a Claim Works

Understanding the claims process helps you know what to expect if you ever need to use your PGI coverage.

Business Default

Your business is unable to meet its loan obligations and defaults on the loan.

Bankruptcy Filing

Corporate bankruptcy proceedings are initiated and completed according to legal requirements, and the lender enforces the PG.

PGI Claim Triggered

You file a PGI claim, providing documentation of the business failure and personal guarantee enforcement.

Settlement Support

PGI provides coverage for 30-50% of your personal guarantee amount, helping protect your personal finances.