Knowledge Centre

• Small business owners facing failure also face increased risk of losing their home.

• The value of personal guarantee backed business loans to SMEs during the pandemic has risen on average by 45% according to analysis by Purbeck Insurance Services, provider of the UK’s only Personal Guarantee Insurance.

No company director wants to have to face up to the prospect of their business becoming insolvent. But directors have a duty to act in a certain way, in accordance with the relevant legislation, should their company find itself in a position where it can no longer pay its debts.

• 1. Applications for Personal Guarantee Insurance double[i] in September 2020 as lenders pull back from emergency loans

• • More than one million small businesses have successfully applied for a government-backed Bounce Back loan since the scheme was introduced at the start of May, according to figures from the Treasury.

    The initiative has handed out loans worth more than £30 billion as SMEs attempt to drive their businesses forward during these testing times.

• • A new survey of commercial finance brokers[i] supporting the UK’s small businesses suggests thousands of firms will be clamouring for business loans as the government support measures ease back:
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  • -> 88% of SME finance brokers anticipate rise in demand for loans as support measures ease
  • -> 87% expect rise in business owners having to sign Personal Guarantees to get access to cash

• A rise in start-ups born during the pandemic^[i] is hugely positive but also not surprising. We’ve had more time to think and do and explore new avenues, particularly where existing business models or employment have ceased to exist. Necessity truly is the mother of invention. But while the pandemic has created new opportunities, the lending environment for start-ups looks set to be challenging.

• ‘Keep your hands off my home’ - Start-ups get cash injection of £25 million without risk of personal guarantee

• For smaller businesses across the UK, the government has introduced a favourable lending package to help firms get access to the funds they need to survive the coronavirus crisis. The Coronavirus Business Interruption Loan Scheme (CBILS) is available via British Business Bank-accredited lenders including high-street banks and smaller specialist lenders until 30 September 2020.

• Personal cost of Pandemic to business owners is high but optimism for the future prevails

• -> 80% of SME bosses have been open and honest about state of finances with workers
• -> 1 in 5 SME owners have put their home up for security for a business loan
• -> 18% of SME bosses took a pay cut, 14% have not paid themselves
• -> 78% of SME workers felt their employer has supported their mental health
• -> 48% confident about their job prospects, 26% pessimistic
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