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Purbeck Personal Guarantee Insurance cautions SMEs over Personal Guarantee risks

Purbeck Personal Guarantee Insurance, provider of the UK’s only Personal Guarantee Insurance to SME business owners and directors has set out its Budget wish-list to the Chancellor of the Exchequer, Rishi Sunak to help struggling SMEs get through to the other side of the pandemic.

The Coronavirus crisis and subsequent lockdowns have hit the UK’s economy hard. While the government has introduced financial support for businesses to help them get through the period safely, these will end in 2021. Deloitte UK predicts that there could be a backlog of insolvencies.

• • CBILS loans worth £1.22bn revealed to have Personal Guarantee attached, average loan 300% more than UK house value at £766,000:

  • -> Freedom of Information request exposes high personal risk to SME owners
  • -> Average loan value £766,000
  • SME business owners could be on the hook for over £150,000 if their business fails
  • -> 39% of SMEs not aware of Personal Guarantee risks[i]
  • -> Concerns over size of loan repayments and awareness of personal guarantee risks

The Government’s fiscal measures introduced in response to the shock of the pandemic – in particular the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) – have helped to bridge the revenue gap for many viable businesses that might have otherwise found themselves in jeopardy.

• A survey of SME workers[i] has found that close to 2 out of 3 people (65%) have suffered from mental health issues as a direct outcome of the pandemic, with women suffering marginally more than men.

While the government’s support measures have undoubtedly helped businesses with their cash flow during the Covid-19 crisis, this rescue action could impact the lending market moving into 2021 and beyond.

• A Personal Guarantee will be unavoidable for many small business owners in 2021, as coffers run dry:

• -> New COVID Loan Programme may reinstate personal guarantees
• -> 22% of small businesses sustained by salary sacrifice or personal savings

• In a new survey of SME workers, by Purbeck Insurance Services, provider of the UK’s only Personal Guarantee Insurance, found: -
•  
• -> 26% say loyalty has improved 
• -> 38% feel positive about career prospects 
• -> 12% of bosses sacrificed salary to support business 

• -> 29% want to kiss goodbye to Zoom 

A snap survey of people working in small businesses across the UK^[i] has found that 65% have made a deliberate decision to support other small businesses during the pandemic and plan to do so this Christmas as far as possible. Marginally more women than men are key advocates of local, small businesses.