As a provider of insurance to mitigate the risk of personal guarantee backed loans, our biggest customer base is small business owners in the construction sector and this is largely due to the increasing demand for finance to plug working capital gaps caused by late payments.
We see subcontractors struggling to manage cash flow due to the late payment of larger construction firms. From our experience, those sub-contractors involved earlier on the in construction process appear to be paid more readily (e.g. groundworks) than those at the end (e.g. electricians/fit out providers). Clearly more action needs to be taken to protect the UK’s sub-contracting market and we welcome strengthening of legislation to stop poor payment practices of large businesses.
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.