Cost of Personal Guarantee Insurance

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March 19, 2021

by a searcher from INSEAD in Miami, FL, USA

Does anyone know the typical costs of PG Insurance as a % of the amount to be guaranteed? Does the SBA allow PG insurance? As an way of working with an SBA loan, if the % is manageable it might be a good alternative to more expensive debt options whilst still protecting your assets.


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Reply by a searcher
from University of Kentucky in Chicago, IL, USA
^redacted‌ PG insurance is not currently offered in the U.S. One insurance company previously underwrote this type of coverage, but exited the market many years ago. There are 2-3 PG insurers in the UK, but they have no interest in underwriting U.S. policies per my conversations with them a couple years ago.
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Reply by a professional
from Pace University in Chicago, IL, USA
I haven't heard of it, but I do recall a situation from 35 years ago where the principal of a company that acquired a company I was working for personally guaranteed the senior loan used to finance the transaction. He got 10% of the loan amount per year, but it was not an arm's length transaction and might have been constructed for tax purposes.
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