When a business comes to a factoring company in order to obtain working capital to grow their business, the company owner may be reluctant to agree to the required Personal Guarantee. The PG is largely considered a deterrent from committing fraud primarily because when using receivables financing the time it would take to actually get repaid from a PG would prohibitive to be done on a regular basis. In fact it is extremely rare to call upon a PG to get an invoice paid. There are much better cost effective and borrower friendly methods to working out a late paying invoice when factoring.
But remember, a factoring company is using its own form of financing to be able to fund all those invoices. And when the factor secures its financing it has to accept the terms and conditions of its senior lender – one of which is to have any factoring client sign the PG. This is standard practice with any conventional bank lending during the current economic climate.
Along comes Asterick Financial which provides Personal Guarantee Insurance for borrowers who might be uneasy signing the PG. Here is a legitimate alternative that will allow the lender to provide the financing and have the borrower accept the terms and conditions of the financing. Like with all types of insurance the details vary depending on conditions of the loan and the company doing the borrowing. But when it comes to invoice factoring and having to sign the PG, this could very well be a workable solution.