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.
Indicating the current stresses on small business finances, Purbeck’s data shows that the number of small businesses who have taken on a new loan with a personal guarantee attached has more than doubled compared to last year and a Freedom of Information Request found as at 27th June 2022, 193,377 of Bounce Back Loans are in some form of arrears. This makes up 12.4% of the total number of BBLS advanced.
Todd Davison, our MD said: “We have seen the hunger for new finance jump over 125% year on year with working capital as the prime reason for new funding. At the same time, the latest insolvency data shows a 67% increase in registered company solvencies year on year and 27% up on pre-pandemic levels. Behind many of these business failures is an individual or team who have not only seen their dream collapse but now have the burden of a business debt to repay if they have provided a personal guarantee for a loan. Mitigating that risk through insurance is bringing certainty to many business owners in a very uncertain economic environment and we would urge small businesses to consider measures such as this as they navigate another difficult trading period following the pandemic.”
Personal Guarantee Insurance mitigates the risk of signing a personal guarantee backed business loan. This means if the business does fail, 80% of the loan will be settled by the insurance rather than the business owner’s home, savings and other personal assets being called on to settle the debt.
The level of cover is based on a fixed percentage of the personal guarantee the company director wishes to insure. This is dependent on whether the corresponding finance facility is secured or unsecured.
Personal Guarantee Insurance also does a lot more than pay out following a claim. Policyholders are offered access to free mentoring and support services if the business gets into financial distress, plus the huge benefit of expert guidance at the point the debt needs to be settled.
