Cost Of Personal Guarantee Insurance

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03/19/2021 Redacted Redacted

searcher INSEAD University of Miami

COST OF PERSONAL GUARANTEE INSURANCE

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. 

2 likes 232 views 18 comments

searcher Harvard University - Harvard Business School United States Coast Guard Academy - 03/20/2021

3% of total debt load (per year) if non-software, 4% if software/SaaS

like reply | 0 likes

investor University of Virginia University of Florida - 03/20/2021

Has this product become available in US yet?

like reply | 0 likes

searcher University of Kentucky - 03/20/2021

^[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.

like reply | 2 likes

professional University of Pennsylvania - The Wharton School - 03/20/2021

Do you remember the name of the U.S. provider? Any hypotheses as to why this doesn't exist stateside?

like reply | 0 likes

intermediary Wake Forest University - Schools of Business Emory University - Goizueta Business School - 03/20/2021

Classic insurance product that would attract adverse selection

like reply | 1 like

searcher University of Kentucky - 03/21/2021

Asterisk Financial was the name of the MGA that offered this through a number of brokerage firms. They underwrote PG insurance for only a couple of years per my understanding and exited the market after the great recession (the exit was unrelated to the viability of the PG insurance product).

like reply | 1 like

searcher Temple University - The Fox School of Business West Chester University of Pennsylvania - 03/24/2021

This was my takeaway as well from the conversation I had. The company that held the paper had other obligations to satisfy and the PG product was an unnecessary casualty.

like reply | 0 likes

searcher University of Virginia-Darden - Darden School of Business Pepperdine University Brigham Young University - 03/20/2021

Probably the underwriting risk doesn't make sense.

like reply | 0 likes

searcher Cornell University - SC Johnson College of Business University of California, Santa Barbara - 03/20/2021

PG insurance is non-existent in the US but hope I am wrong. Been searching for one and been often told it's been discontinued for years.

like reply | 0 likes

professional Pace University Vassar College - 03/21/2021

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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investor University of Virginia-Darden - Darden School of Business Davidson College - 03/21/2021

It 100% existed in[redacted]timeframe when I was searching. Had not heard of it since. I was always curious if it still existed. Sounded like it does not.

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searcher University of Pennsylvania - The Wharton School University of Texas at Arlington - 03/21/2021

i have not tried this.

like reply | 0 likes

searcher Temple University - The Fox School of Business West Chester University of Pennsylvania - 03/22/2021

It only exists in the UK now. I know of one company that does it that was planning to bring it to the US this year, but COVID. My guess is late this year or 2022

like reply | 0 likes

searcher Babson College - F.W. Olin Graduate School Trinity College Connecticut - 03/24/2021

Also interested

like reply | 0 likes

admin Massachusetts Institute of Technology - MIT Sloan School of Management Taylor University Stanford University - Graduate School of Business - 03/24/2021

Tagging a few Searchfunders that have commented on Personal Guarantee Insurance that might be able to comment here :

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like reply | 0 likes

searcher University of Idaho - 03/24/2021

^[redacted]‌ Appears as though this is not currently offered in the US, but interesting nonetheless.

like reply | 1 like

searcher Carleton University - 03/24/2021

^[redacted]‌ is the expert on this. He has responded above already. The short answer is that none currently exists in the US, but the longer answer is that some people are working to try and bring it back.

like reply | 1 like

searcher Johns Hopkins University Emory University Emory University - Goizueta Business School University of Alabama - Birmingham Southern Methodist University - Edwin L. Cox School of Business - 05/31/2021

Had no idea such a thing existed anywhere. Would love to be kept in the loop on this as things progress....

like reply | 0 likes

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