Most UK business owners know the feeling: you’ve found the right growth opportunity, you’re ready to borrow, but the lender slides over the paperwork and there it is , the personal guarantee (PG) clause.

Roughly 90% of business loans in the UK require a PG. It means if your company defaults, the lender can pursue your personal assets. For many directors, that’s not just stressful ,it’s a deal-breaker. And if your business has a complicated cap table with multiple shareholders or minority investors, PGs can be nearly impossible to arrange fairly.

So, is there another way? Yes. Let’s break down two practical routes to secure finance without tying up your personal life: going the secured lending route with a debenture, or protecting yourself with personal guarantee insurance (PGI).

1. Secured Lending: Using a Debenture Instead of a PG

A debenture is essentially a legal charge over your company’s assets. Instead of relying on your personal wealth, the lender takes comfort from the company’s property, machinery, stock, or even receivables.

Take the example of a family-owned manufacturing company. They want a £500,000 loan to upgrade their machinery. Normally, directors would be asked to sign a personal guarantee. But in this case, the company can offer a debenture over its existing equipment and warehouse. Lenders such as Funding Circle and others are open to this structure. The loan still gets funded, but the directors sleep easier knowing their homes aren’t on the line.

The catch? Not every business has enough tangible assets to pledge. If your company is asset-light - say a consultancy or software firm,  this option may not work. That’s where PG Insurance comes in.

2. Personal Guarantee Insurance (PGI): Reducing the Risk

Personal Guarantee Insurance doesn’t remove the PG entirely, but it softens the blow. In essence, PGI covers a large chunk of the risk you’re taking on. Most policies insure up to 80% of the guarantee.

Here’s how it works in practice. Imagine a tech consultancy borrows £250,000. The lender insists on a personal guarantee from the two directors. Each is now on the hook if things go wrong. But with PGI in place, the majority of that liability is insured. If the lender ever calls in the PG, the insurer steps in to cover most of the loss.

The clever bit? The insurance premium can usually be put through the business as an operating expense, rather than coming out of directors’ pockets. This transforms PGI from a “nice-to-have safety net” into a smart, strategic tool.

Who offers PG Insurance in the UK?

While the market is still developing, notable names include:

• Purbeck Insurance – one of the first UK specialists in PGI, offering cover up to 80% of the guarantee.
  
  
• Towergate Insurance – provides PGI for secured and unsecured loans, with set maximum limits.
  
  
• Clifton Private Finance – works with directors across sectors to structure PGI solutions.
  
  
• RLA Capital – also provides PGI to directors seeking to reduce exposure.
  
  

Each has slightly different terms, but the principle is the same: reduce the director’s personal risk and make finance more accessible.

Why This Matters

Personal guarantees have long been a stumbling block for UK SMEs. Too often, directors have walked away from growth opportunities because they couldn’t risk their house or savings. But with secured lending routes like debentures and innovative tools like PGI, there are now realistic ways to unlock finance without putting everything on the line.

Final Thoughts

If you’re weighing up your next funding round or considering expansion, don’t automatically assume a PG is unavoidable. Start by assessing whether you can offer a debenture over company assets. If not, or if lenders still insist on a guarantee, explore Personal Guarantee Insurance as a way to limit exposure.

For many directors, these options provide the freedom to grow the business with confidence — knowing that even in a worst-case scenario, their personal lives won’t be upended by a signature on a loan document.

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