News

October 2023: As Buy to Let mortgage rates start to fall and the number of landlords securing limited company buy to let mortgages rise, Purbeck Personal Guarantee Insurance is warning Professional Landlords to keep their eyes wide open over the risks of personal guarantees as a condition of the mortgage. Purbeck’s analysis shows the average Limited Company Buy to Let Mortgage was £948k in 2022.  So far in 2023, the average Buy to Let Mortgage has shrunk to £895k based on Purbeck’s data.

Business buy-to-let mortgages provide an excellent opportunity for businesses to invest in commercial property, whether to be let to a third party or to be used as premises to trade from.

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.

Following news that UK ministers are poised to launch a new £3bn recovery loan scheme that will require business owners to provide personal guarantees, Todd Davison, MD of Purbeck Personal Guarantee Insurance has cautiously welcomed the move but is urging the Government to ensure SMEs are under no illusions about the risks given the current challenges many businesses are facing.

While company status often offers protection to a business director, there are certain circumstances when directors may be held personally liable.

• • -> Personal Guarantee Backed Loan Applications by Small Builders/Contractors up 58%
  • -> Loans for ‘working capital’ up 78%
  • -> Average loan value falls by £23,000
    
    

• • Applications for Personal Guarantee Insurance to support business funding rose 50.5% Q1 2022 vs Q1 2021
    In March 2022, the number of applications doubled those received in March 2021. 
    • 35% of finance applications with a personal guarantee attached are for ‘Working Capital’
    • Applications for personal guarantee insurance to support funding for ‘Working Capital’ up 88% vs Q1 2021
    • The average loan rises 22%, from £142,718 in Q1 2021 to £174,104 Q1 2022
    • Finance applications for business development up 69%

Loan notes, promissory notes, bill of exchange; whatever you call them, they’re an integral part of modern business and financial management. 

You can be doing lots of business, but still be relatively cash poor. The late payment of invoices makes cash flow a real issue for SMEs who, having done the work and paid for supplies, are left to wait to receive the revenues for the labour.