The number of small business owners applying for insurance to protect their personal assets if their business fails, has jumped 84% from the first week of February and the volume of applications over the whole month have almost doubled compared to February 2019.
Purbeck Insurance Services provides Personal Guarantee Insurance to the owners of small businesses who have taken out business loans using their home and other assets as security. The business has seen applications jump 94% this February compared to February 2019.
However, February was not a peak month for Purbeck, suggesting applications are not solely linked to fears concerning the impact on small businesses from coronavirus.
The top 5 sectors applying for Personal Guarantee insurance cover this February were:
- 1) Construction
- 2) Manufacturing
- 3) Professional Services (Accountancy/Legal/Marketing)
- 4) Real Estate Activities (Estate Agents/Letting Agents)
- 5) Transportation, Storage and Distribution
Todd Davison, MD of Purbeck Insurance Services said: “Banks have reported that they are reaching out to SMEs to help ease the financial strain on the back of the virus. This action is to be applauded but any loan comes with a risk and more often than not, this will fall on the shoulders of the business owner if they are required to sign a Personal Guarantee.
“Our figures show that increasing numbers of small business owners are taking action to reduce that risk, potentially over fears related to coronavirus but also to help sustain cashflow in the face of the ongoing challenges around late payment. The key is to ensure cover is in place before the business starts facing financial difficulties.
“We would urge small business owners to speak to their financial broker, accountant or solicitor to understand how they can mitigate the risk of a personal guarantee, such as through Personal Guarantee Insurance.”
With personal guarantee insurance, you can cover up 80% of your risk, so you’re personally protected as you plan the future funding and growth of your business. For more information on what personal guarantee insurance entails, speak to one of Purbeck’s specialists today on 0208 004 7250.