New survey reveals how Personal Guarantee Insurance can support SME access to finance
Ahead of NACFB Expo 2019, Purbeck Insurance Services, the UK’s only insurance provider to offer Personal Guarantee insurance, has revealed that nearly three quarters of SMEs (74%) would be more likely to take out a loan with a Personal Guarantee if they could insure against the risk of providing it. The most common reasons businesses want to take out a loan are to improve cashflow (28% of respondents) and acquire new equipment (27%).
According to research undertaken by Purbeck amongst 500 owners and directors of UK SMEs[i], 15% of firms with a turnover of £1m-9.99m said they called on the expertise of a Finance broker when securing finance for their business. Furthermore, most would expect their finance broker to inform them of ways to protect their assets, with 87% respondents expecting their broker to mention the availability of insurance to cover the risk.
Todd Davison, Director at Purbeck Insurance Services said: “This survey highlights the valuable business opportunity Personal Guarantee Insurance offers to finance brokers. The NACFB Expo is a great opportunity to extend awareness of this insurance at a time when the SME community is going through enormous financial pressures due to the on-going uncertainty caused by Brexit.
“It takes courage and commitment to put your personal assets on the line for your business. Our survey demonstrates that if directors are made aware of risk-mitigating options for a Personal Guarantee backed finance agreement, they may be more open to considering this type of finance.
Personal Guarantee Insurance can play a key role in supporting finance deals, not only helping brokers to grow business and build trusted relationships with their clients but also providing an opportunity for them to earn additional commission.
“Our survey also found that a business’s bank or accountant are the most common places SMEs go to arrange new finance. However, the higher the turnover, the more likely the business is to seek advice from sources other than just their bank and accountant. Personal Guarantee Insurance can therefore give finance brokers a distinct edge in this competitive market.”
Personal Guarantee Insurance offers protection against the risk that the Guarantee is called by a lender and will offset any outstanding obligations called in under a Personal Guarantee. The level of cover is based on a fixed percentage of the Personal Guarantee the company director wishes to insure and this is dependent on whether the corresponding finance facility is secured or unsecured.
Purbeck offers Personal Guarantee Insurance for SME Directors who have business loans or financial agreements. We cover up to 80% of your risk, giving you peace of mind as you plan the future growth of your business. Please contact one of our specialists today to learn more on 0208 004 7252.
[i] 500 SMEs surveyed by Censuswide, March 2019