Following news that UK ministers are poised to launch a new £3bn recovery loan scheme that will require business owners to provide personal guarantees, Todd Davison, MD of Purbeck Personal Guarantee Insurance has cautiously welcomed the move but is urging the Government to ensure SMEs are under no illusions about the risks given the current challenges many businesses are facing.
While company status often offers protection to a business director, there are certain circumstances when directors may be held personally liable.
We all know that in order to make money, you need to spend money, which is why many SME directors choose to take out loans to help their businesses grow, or when starting on a new venture.
April 2022: Following a report in the Financial Times this week suggesting that(i) a permanent replacement for the loan schemes offered to small and medium sized businesses during the pandemic is in the pipeline, we have welcomed the move but urge caution over personal guarantee requirements which could prove a barrier to take up.
As a business owner, you’ve got to be comfortable with an element of risk. Not only are you risking your own money, but if you take out credit, you’re risking somebody else’s too.
Starting a business is one thing but keeping it going often needs extra cash and while there is a good choice of funding options to consider, as a start-up it is unlikely you will have security in the business to offer the lender. This means you may need to sign a personal guarantee.
March 2022: Ahead of the Chancellor’s Spring Statement on 23rd March 2022, we're urging Rishi Sunak to consider key measures to support small businesses following news that company insolvencies doubled in February[i].
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