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1 in 5 Personal Guarantee Insurance applications from start-ups Q2 2022

Personal guarantees are an effective way to secure a loan that is crucial to your business’ growth and success. However, there’s no denying the risk to your personal assets.

September 2022: Purbeck Personal Guarantee Insurance, the U.K.’s first and only provider of personal guarantee insurance to the owners and directors of small businesses, has welcomed the Energy Bill Relief Scheme announced today, to cap the amount small firms can be charged for their energy bills.

For many businesses, the recovery loan scheme provides a critical lifeline for financial recovery and growth, providing access to crucial funding required to navigate the economic challenges in the months following the pandemic. 

Purbeck’s top tips for surviving a recession

August 2022: Purbeck Personal Guarantee Insurance, the U.K.’s first and only provider of personal guarantee insurance is urging small businesses to think like mortgages switchers and consider a fixed rate loan now to support investment or to sustain a business, while rates remain low. Since March 2021, businesses have, in aggregate, repaid more finance from banks and capital markets than they have raised. Company insolvencies are also returning to pre-pandemic levels after the lows recorded in the pandemic.

Todd Davison, our MD said: “Bank risk-appetites are largely returning to what they were in 2019 but small businesses are paying back more than they are borrowing.  That makes sense if you are on a floating interest rate for a loan.  However, around 25% of small businesses made use of the Bounce Back Loan Scheme with a low fixed interest of 2.5%.  Given the Bank Rate is forecast to peak at 1.9% during 2023, any small business considering new funding needs to act fast to protect themselves from the impact of rate rises, just like many people switching to fixed rate mortgages."

“While reticence to take on more debt is understandable, many business owners wouldn’t think twice about a mortgage for a dream home. One of the major comfort factors with a business loan is that Personal Guarantee Insurance protection cuts the risk of losing everything should a business fail, making the decision to take on a loan far easier.”

125% year on year increase in loans secured with personal guarantee attached

July 2022: Purbeck Personal Guarantee Insurance, the U.K.’s first and only provider of personal guarantee insurance has published its Q2 2022 figures on the take up of Personal Guarantee backed loans by small business owners, based on the volume of personal guarantee insurance (PGI) policies sold.  The volume of finance deals has jumped 125% year on year and small firms are ploughing more cash into acquisitions and growth.

The data is the only reliable source of information on the finance being secured by UK SMEs which have personal guarantees attached where the risk to the business owners/directors personal assets has been mitigated through insurance.

Insolvency – something that you probably don’t want to think about, especially if you’ve taken out a personal guarantee on a business that may be struggling, but it’s important that we do.

July 2022:  Our latest Freedom of Information request to the British Business Bank has uncovered the scale of debt and arrears associated with the Bounce Back Loan Scheme (BBLS). The findings have been revealed as the Financial Conduct Authorityⁱ  calls on lenders to treat SMEs fairly when recovering debts of up to £25,000 which fall under the consumer credit act.  The data revealed shows that BBLS loans in arrears as of end of June 2022, all exceed this amount, with the average loan £29,357.

Does the cost of Personal Guarantee Insurance outweigh the risk?

Taking out a business loan is no simple matter. There’s a lot of money on the line, which is why it’s important that your assets are properly protected in the event that your business becomes insolvent.

When signing a personal guarantee in support of the business loan, you can choose to protect yourself by purchasing personal guarantee insurance.

As part of this process, you are well within your rights to make enquiries before you commit to a particular insurer’s policy, but how do you check whether an insurance company is safe and reliable?

Our specialists have put together a series of questions that you can ask your potential personal guarantee insurance provider to ensure that they are the safest and most reliable choice.