Asterisk Financial has introduced Personal Guarantee Insurance, a new insurance product that protects small-to-medium-size (SMB) business owners, or anyone who guarantees a SMB loan, against major loan-related losses.

According to Asterisk, loan guarantors including business owners, commercial real estate investors and limited partners can have a substantial portion of their net liability covered if the underlying business should fail. Asterisk has also applied for a patent for Personal Guarantee Insurance.

SMB owners, limited partners and commercial real estate investors are required to personally guarantee a commercial loan transaction, exposing their personal assets when they take out a business loan. This puts them at risk of losing their home, savings and other personal assets if the business should get into trouble and default on the loan.

Asterisk claims that its Personal Guarantee Insurance assures guarantors that they are protecting their personal assets when they sign a guarantee for a commercial loan.

Personal Guarantee Insurance will cover a substantial portion of the insured’s net liability, subject to the terms of the policy, in case if the lender seeks personal assets to repay the balance of the loan, after liquidating the business assets.

Asterisk will use a direct selling approach and is initially licensed to offer Personal Guarantee Insurance in Connecticut, Illinois, Indiana, Iowa and Wisconsin, with plans to expand to at least 10 other states in 2010 and 2011.

Mark Ricciardelli, CEO of Asterisk Financial, said: Personal Guarantee Insurance from Asterisk is a unique product designed to address that risk, covering a substantial portion of what is owed after the business liquidation, and thus, reducing the personal exposure to small and medium size business owners and other investors.