Most founders sign a personal guarantee without a clear picture of what it means. New research from PGicover and Venture for Canada shows how common that is, and what has changed.
A personal guarantee moves a business debt onto the owner personally. Research from PGicover and Venture for Canada across 103 founders, lenders and advisors found 74 percent of founders had signed one, 60 percent did not clearly understand the clause, and 61 percent did not know insurance for it existed. Personal Guarantee Insurance is now available in Canada. It reimburses the owner for part of what they pay if the guarantee is called. It does not cancel the guarantee or repay the loan.
There is a moment in almost every business loan that nobody puts on the agenda.
The paperwork is finished. The lawyer has walked the covenants. The lender is ready to fund. Then one more page comes across the table, and on that page is a clause that quietly moves the debt off the company and onto you.
One founder put it to us like this:
The PG clause is always something I hate to agree to, so anything that can lower that risk, I'm all in.
David, business owner
He is not being dramatic. He is describing the most rational fear in small business lending.
What you are actually signing
A personal guarantee is a promise that if the company cannot repay the loan, you will repay it yourself, out of your own money.
That is the whole clause. It is short, it is usually buried, and it rarely gets its own meeting. But it changes what the loan is. Without it, the lender is betting on a company. With it, the lender is also betting on you, your savings, and what you own.
If the business fails and the guarantee is called, the debt becomes yours personally. A lender who gets judgment can pursue personal assets. Depending on your province's exemptions, that can reach investments, savings and the family home.
That is why the signature lands the way it does. You are not being asked to believe in your business. You are being asked to put your household behind it.
It is not just you
We ran research with Venture for Canada to find out whether this dread was widespread or just something we kept hearing in a handful of conversations. The answer came back across 103 responses from founders, lenders and advisors.
Source: PGicover and Venture for Canada research, 2026.
Read those last two lines together. Almost nine in ten founders wanted a way to lower this risk. Six in ten had no idea one existed.
When founders described their worries in their own words, the same three things came up. Losing personal savings or the family home. Not knowing how unlimited the liability really was. Not knowing whether a guarantee could ever be capped, negotiated or released.
The part that made it worse
For a long time, the honest answer to this fear was that nothing much could be done.
A founder had three options. Try to negotiate the guarantee down, which most lenders resist. Refuse to sign, and lose the loan. Or sign it and hope.
The lender side of our research explains why option one so rarely works. Every lender we surveyed requires a personal guarantee at least sometimes. More than eight in ten require one always or often. Almost six in ten require one every time.
And their reasons had almost nothing to do with the individual founder. They pointed to limited collateral, credit history, internal policy and loan size. The guarantee is how a lender manages risk across a whole book. It is not a judgment about you.
Here is the uncomfortable part. Lenders told us they see borrower worry about the guarantee often, but only around one in ten said borrowers understand it very well. Almost all of them said better borrower education would help.
Advisors saw the same thing from their side. Most said guarantees come up frequently in client work. Most said their clients understand the exposure only somewhat, or poorly. They watched the same fear arrive on file after file, and had nothing to hand the client.
So the dread was real, it was widespread, and it was treated as simply part of the deal.
What changed
Personal Guarantee Insurance is now available in Canada, underwritten by Markel, an A rated carrier.
In plain terms, you insure the guarantee you signed.
If the guarantee is called and you end up paying, the policy reimburses you for most of what you paid, up to the limit on your policy and less your own share, which is set out in your schedule. There is also support built in. When a demand arrives, the policy funds professional help to negotiate the amount down before it is settled.
The guardrails matter, so here they are.
It is claims-made. Cover only applies to a claim that is first made and reported during an active policy period, with premiums paid. A closed, cancelled or lapsed policy cannot take a new claim.
Payment comes at the end, not the beginning. The insolvency process has to run its course and conclude before the policy pays. Money flows from you to the lender, and the insurer reimburses you afterwards.
And it is partial by design. Terms, conditions, exclusions and limits all apply, and they are worth reading before you buy.
What it does not do
It does not cancel your guarantee. That clause stays exactly as you signed it.
It does not repay your loan, and it does not pay your lender. The reimbursement goes to you.
It does not stop a business from failing, or a lender from enforcing, or an insolvency from happening.
What it does is change how much of the personal loss you finally carry. That is a smaller promise than founders sometimes hope for, and it is the honest one.
Where to start
The dread David describes is not irrational, and it is not something you have to accept as the price of borrowing.
Before you sign anything, read our checklist of questions to ask before you close, and understand what actually happens when a personal guarantee is called. If you have already signed, those are still worth an hour of your time.
Then see where you stand. It takes a few minutes, there is no obligation, and it does not affect your credit.
Common Questions
Sources and References
This article draws on PGicover's own primary research, conducted in partnership with Venture for Canada.
- PGicover and Venture for Canada Intrapreneurship Program. Personal Guarantee Insurance Research: survey findings from 103 founder, lender and advisor respondents. 2026.