News

Finance warning to UK’s small business owners as Brexit uncertainty continues

• - 70% of small business owners say Brexit uncertainty has made business harder
• - Long hours and pressure on family life some of the hardest aspects of running your own business
• - Small business owners cautioned on taking loans that will put personal finances at risk – 43% arrange funding without seeking independent advice

It’s a buzz running a small business, but as a Director of a growing business, I have a fairly good idea of what can keep other small business owners awake at night.  Cashflow.

Whether it’s getting money in, paying it out or finding new sources of investment, managing finances can be a headache.  So when business owners are faced with the challenge of finding extra cash quickly, where do they go?

As Britain’s top banks reaffirm their commitment to back British business through access to finance, ahead of Brexit[i], Purbeck Insurance Services is urging small business owners not to be deterred by a Personal Guarantee to secure access to funding but to look at ways they can mitigate the risk. In a survey by Purbeck[ii], over 1 in 10 small business owners (12%) said they’d decided against taking out a business loan because it included a Personal Guarantee.  

Purbeck Insurance Services is the UK’s only insurance provider to offer Personal Guarantee Insurance.

Demand for Personal Guarantee Insurance from small businesses who have secured finance from Peer to Peer lenders such as Funding Circle rose 40% in the first six months of 2019 compared to H2 2018.    Analysis by Purbeck Insurance Services, the UK’s only insurance provider to offer Personal Guarantee insurance also found that the number of small businesses seeking personal guarantee insurance for unsecured loans has risen 58% in the same period. 

In the first six months of 2019, the number of small business owners and directors who purchased Personal Guarantee Insurance for a Personal Guarantee backed finance deal rose 23%, compared to the previous six months.  Most small business owners buy protection for loans of £25,001-£50,000 and the demand for insurance protection for this bracket has grown 38% in H1 2019.  However, the number of policies for loans of £50,000-£75,000 has risen by 138% over the same half year period.

If you are one of the many small businesses that have turned to P2P lending to help fund your business, the news concerning the mixed fortunes of these platforms may be giving you pause for thought.  P2P lending platforms have become a valuable route to cash for small businesses.  However, it appears that the well-publicised collapse of firms such as Lendy is making small businesses more focused on the risks, particularly where a Personal Guarantee has been signed to secure the funding.

• When making a commercial credit application, in order to inject funds into your business, there’s every chance that you’ll be required to provide a personal guarantee. If you’ve never been through the process before you may be unaware of the implications of doing so and therefore unable to make an informed decision.

  By the end of this article, you’ll understand what it means to sign a personal guarantee, why lenders require it and how you can mitigate your risk.

• When making a commercial credit application, in order to inject funds into your business, there’s every chance that you’ll be required to provide a personal guarantee. If you’ve never been through the process before you may be unaware of the implications of doing so and therefore unable to make an informed decision.

  By the end of this article, you’ll understand what it means to sign a personal guarantee, why lenders require it and how you can mitigate your risk.

• We recently interviewed 500 SME business owners and here is what they had to say...

• Going off the name alone, a secured business loan can sound like the less risky option when trying to obtain some additional funding for your company. But it is less of a risk for the lender, as they are sanctioned on the condition that the borrower offers business assets as ‘security’.

  
  

  Typically, the borrowing business will put forward a company asset such as property, land or equipment. This means the loan is ‘secured’ against one or more of these assets, which the lender can take if a business stops making repayments.