Personal Guarantee Insurance for Conventional Business Loans
Yes, you can insure a personal guarantee on a conventional business loan. Personal Guarantee Insurance (PGI) covers up to 80% of what you owe under your guarantee on a term loan, line of credit, equipment financing, lease, commercial real estate loan, or seller note, with limits up to $10 million. New and existing loans both qualify.
Why conventional borrowers need this
Most business lenders ask the owners to personally guarantee the debt. If the business can't repay, the lender can come after the guarantor directly, and that can reach your home, your personal savings and investments, your spouse's and family's assets, your future wages, and your credit.
Until now, insurance for that exposure in the U.S. only existed for SBA loans. A dentist refinancing with a regional bank, a buyer financing an acquisition with a seller note, or a company drawing on a revolving line had no way to cap the downside. PGI for conventional loans closes that gap.
Loans we can cover
Eligible
- Term loans, fully amortizing or balloon, 12 months or longer
- Lines of credit and revolvers, including practice working-capital lines
- Equipment loans and finance agreements for dental, imaging, lab, surgical, veterinary, and technology equipment
- Capital and operating leases
- Commercial real estate loans, owner-occupied or investment, including construction and bridge
- Seller notes in a practice or business acquisition, even when the seller note is the only financing
- Asset-based lines secured by accounts receivable
- Bridge and mezzanine loans with a documented exit or refinance plan
Not eligible
- SBA-guaranteed loans (see PGI for SBA Loans)
- Merchant cash advances and revenue-based financing
- Factoring and invoice discounting
- Business credit cards
- Swaps, hedges, and treasury-management obligations
- Loans for land speculation, personal use, or a non-operating holding company
- Loans from a lender affiliated with you
Coverage at a glance
- Who is insured
- You, the individual who signed the guarantee. Owners, spouses, key employees, and family members who guarantee the loan are all eligible, and each co-guarantor can buy a separate policy.
- Coverage
- Choose 50%, 60%, 70%, or 80% of your guaranteed amount. Lower percentages are available on request.
- Limit
- Your coverage percentage times your guaranteed amount, up to $10 million per policy. Limits above $5 million need the carrier's approval before the policy is issued.
- Loan size
- $50,000 to $12.5 million, with larger loans considered case by case
- Loan age
- Apply at closing or any time after, as long as the loan is current
- Lenders
- Banks, credit unions, equipment finance companies, private credit funds, and other commercial lenders, plus the seller on a seller note
- Credit check
- We don't pull your personal credit report
- Net worth
- No minimum
- Policy term
- 12 months, renewable each year the loan is outstanding
Who it's for
The program was built around professional practices, which have some of the lowest default rates in small business lending, and it covers most other operating businesses too.
Professional practices
- Dental, orthodontic, and oral surgery practices
- Physician, chiropractic, optometry, mental health, and physical therapy practices
- Veterinary practices
- Independent pharmacies
- Law and accounting firms
- Investment advisory firms and insurance agencies
- Home health, assisted living, and child care operators
Other operating businesses
- Engineering, consulting, and marketing firms
- Service trades such as HVAC, plumbing, and electrical
- Manufacturing, wholesale, and logistics
- Restaurants, hotels, and retail
- Franchises in any of these categories
- Start-up and de novo practices, for licensed professionals with at least two years of experience
Not eligible: cannabis, adult entertainment, gambling, and crypto-asset businesses.
What it costs
Premium is an annual charge on your coverage amount. It depends on the type of loan, the strength of the business, your personal finances, the lender, and the collateral behind the loan. Seasoned loans with a clean payment history, strong collateral, and capped guarantees all earn lower rates. The minimum premium is $1,000 per policy.
Example. A dentist guarantees a $1.25 million, 10-year loan to acquire a practice and chooses 80% coverage, a $1 million limit. With a profitable practice and a partner lender, the annual premium is $20,250, about 2% of the coverage amount, plus state surplus lines taxes and fees. Your quote will reflect your own loan and finances.
How to get covered
- Apply online and upload your loan documents, your guarantee, a recent personal financial statement, and your tax returns. For an existing business we also need two years of business financials.
- We underwrite the business, the loan, the lender, and your finances together, and send you a quote. Loans from our partner lenders need less paperwork.
- You choose your coverage percentage. An approved quote stays open for 60 days, so you can line it up before closing.
- Coverage starts at closing, or when you pay the premium on a loan that has already closed. The policy is issued in your name and renews each year.
If the lender calls your guarantee
- The lender sends you a written demand for payment under your guarantee, files suit, or obtains a judgment against you.
- You send the demand to the claims administrator listed in your policy. Within 10 business days you'll hear whether anything else is needed.
- The lender sells or collects the business collateral first. If that hasn't finished within 180 days (12 months for real estate), the collateral's appraised value is credited and the claim moves forward.
- The policy pays your coverage percentage of what's still owed, up to your limit, within 30 days. Payment goes straight to the lender, or to you if you've already paid.
- The carrier won't come after you, your spouse, or your personal assets to recover what it paid.
Covered amounts are unpaid principal plus up to 180 days of regular interest. Default interest, late fees, prepayment penalties, and the lender's legal costs are not covered. See the policy for all terms and exclusions.
SBA or conventional? Pick the program that matches your loan.
| PGI for SBA Loans | PGI for Conventional Loans | |
|---|---|---|
| Loan types | SBA 7(a) and 504 | Term loans, lines of credit, equipment financing, leases, commercial real estate, seller notes |
| Coverage | Up to 80% | 50%, 60%, 70% or 80% (lower on request) |
| Loan size | Up to $5M | $50K to $12.5M |
| Limit | Up to 80% of the loan | Up to $10 million (above $5 million with carrier approval) |
| When to apply | At closing or within six months | At closing or any time after, if the loan is current |
| Availability | 43 states | A growing list of states; check eligibility |
If you're not sure which program fits, start the quote and choose "Not sure." We'll route it.
For lenders
PGI gives guarantors on your conventional book the same protection SBA borrowers have, which can make a guarantee easier for a strong borrower to sign. Partner lenders get streamlined documentation for their borrowers: we can rely on your credit memo instead of asking the borrower for full business financials.
Frequently asked questions
Can I insure a personal guarantee on a non-SBA loan?
Yes. PGI for conventional loans covers personal guarantees on term loans, lines of credit, equipment financing, leases, commercial real estate loans, and seller notes.
Can I cover a loan I already have?
Yes. There's no limit on how long ago the loan closed, as long as it's current when you apply. Loans with 24 months or more of on-time payments can qualify for a lower rate.
Does my lender have to be a partner?
No. Loans from banks, credit unions, finance companies, and most other commercial lenders are eligible. Partner lenders just mean less paperwork for you.
Will you check my credit?
No. We don't pull your personal credit report or use a credit score to decide eligibility. We look at your personal financial statement, your income, the business, and the loan.
How much of my guarantee can I cover?
You choose 50%, 60%, 70%, or 80% of your guaranteed amount, and lower percentages are available on request. Your limit is that percentage times your guaranteed amount, up to $10 million per policy, and limits above $5 million need the carrier's approval. If your guarantee is capped or limited, coverage is based on the capped amount.
Can I cancel?
Yes, at any time, with written notice. Unearned premium is refunded on a pro rata basis within 15 days, with no minimum earned premium.
What if I sell my business?
If the sale pays off the loan, you can cancel the policy and receive a refund of unearned premium. If the buyer takes over the loan and you remain a guarantor, tell us within 60 days so we can endorse the change of borrower to your policy.
Does this replace the SBA program?
No. SBA 7(a) and 504 loans stay on our SBA program. Conventional coverage is a separate program for loans that aren't SBA-guaranteed.
What isn't covered?
The policy doesn't pay if the demand results from fraud, if the loan was more than 30 days past due or in default when coverage started, or if it results from the death of the guarantor. It also excludes loan increases that weren't added to the policy, and liability under non-recourse carve-out guarantees. The policy lists every exclusion.
Who owns the policy?
You do. The policy insures the individual guarantor. The lender has no rights under it.
Is PGI available in my state?
Conventional PGI is available in a growing number of states. Start a quote and we'll confirm availability for your state right away.