8 out of 10 small business chiefs come clean when they put the home on the line

Money worries can be the biggest cause of relationship woes but recent research by Purbeck Insurance Services, the provider of Personal Guarantee Insurance has found that most small business owners do the right thing and come clean to their partner when they take the big step of putting the family home on the line for their business.  8 out of 10 small business owners[i] have informed their partner about a personal guarantee they have signed for new business finance. 

Whether to help cashflow or fund growth plans, for many small businesses, signing a personal guarantee is the only way to access new finance.  However, if things do go wrong and a call is made under the guarantee, all their personal assets will potentially be on the line – including the family home, car, bank account and life savings.

With news that half a million businesses are in financial stress^[ii], Purbeck is urging small business owners to cut the risk personal guarantees pose – both to their relationship and their personal finances.  Crucially, businesses should put personal guarantee insurance in place for new or existing loan arrangements before any negative change to their finances might occur.  This insurance cover will make the news easier to convey to their partner and provide financial protection if things do go wrong.  

In January 2020, there was a 108% year on year increase in the number of small business owners taking insurance to protect against the risk of a Personal Guarantee being called in. 

In most cases, a Personal Guarantee will put joint assets at risk – it should therefore be a joint decision in a relationship. It is easy to understand why a small business owner may not want to burden their partner with this knowledge but honesty really is the best policy and the news will go down a lot more smoothly if the risk has been mitigated through personal guarantee insurance.

• Purbeck Insurance is a specialist Personal Guarantee Insurance underwriter, authorised and regulated by the Financial Conduct Authority. We work alongside lenders and brokers to provide a bespoke insurance solution based on the lender’s individual requirements and risk profile. Please contact one of our specialists today to learn more on 0208 004 7250.
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[i] 500 small business owners survey by Censuswide on behalf of Purbeck Insurance Services, 2019

[ii] https://www.thegazette.co.uk/insolvency/content/103487