Knowledge Centre

No business, big or small, has been able to escape the impact of the Covid-19 pandemic – with over a year of restrictions, lockdowns and uncertainty taking its toll.

June 2021: As many businesses face the financial impact of four more weeks before pandemic restrictions lift, small business owners who have become personal guarantors for CBILS loans over £250,000 are being warned that lenders will come to them first, if they default on the loan – not the Government.

June 2021: The personal financial risk of becoming a personal guarantor for a business loan has become a fact of life for 1 in 3 small business owners but it’s also a secret for 1 in 5. This is according to a new survey of 1000 SME business owners and directors^[i] by Purbeck Personal Guarantee Insurance, provider of the UK’s only Personal Guarantee Insurance.

-> Freedom of Information request exposes high personal risk to over 2,300 business owners

-> Average size of a Personal Guarantee backed business loan at the end of the Coronavirus Business Interruption Loan Scheme "CBILS" was £774k.

-> In total, £2.1 billion of CBILS loans were supported by Personal Guarantees.

-> SME business owners could be on the line for over £154k if their business fails.

-> Many SMEs will have ‘Topped Out’ on CBILS, preventing access to the Recovery Loan Scheme.

When it comes to business insurance, owners are typically well informed with products such as employers' liability insurance, public liability insurance and business interruption insurance. But if you have ambitions to grow your business, there are other types of insurance which should be in your thinking.

Credit cards and overdrafts prove to be lifelines for SMEs in Pandemic

• -> 54% of SMEs need to secure new finance in 2021, of these, 54% will apply for a loan through the Recovery Loan Scheme
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• -> 34% think the Government hasn’t done enough to support small businesses
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• -> 43% saw a fall of more than 25% in business income in 2020

Being a company director can take its toll. A new survey showed that up to half of business leaders were susceptible to stress and exhaustion – even when their company was doing well. For some directors, boardroom burnout can force them to consider resigning from the business.

Funding through Personal Guarantee backed loans could be only option.

Borrowing hit record levels in 2020 with almost half of the UK’s small and medium-sized businesses seeking out financial support – more than three times the level of the previous year – amid the coronavirus pandemic.

Interest on average Personal Guarantee backed loan through CBILS could reach £327,000.

The Office of Budget Responsibility has predicted a default rate of 40.4% on BBL and CBIL finance to SMEs, with £27.2 billion of loans expected to be written off^[i].  Purbeck Personal Guarantee Insurance, provider of the UK’s only Personal Guarantee Insurance to SME business owners and directors, is urging the 59%^[ii] of businesses revealed to have borrowed more than 20% of their turnover, to calculate their repayments and heed the insolvency warning signs.