News

-> Freedom of Information request exposes high personal risk to over 2,300 business owners

-> Average size of a Personal Guarantee backed business loan at the end of the Coronavirus Business Interruption Loan Scheme "CBILS" was £774k.

-> In total, £2.1 billion of CBILS loans were supported by Personal Guarantees.

-> SME business owners could be on the line for over £154k if their business fails.

-> Many SMEs will have ‘Topped Out’ on CBILS, preventing access to the Recovery Loan Scheme.

When it comes to business insurance, owners are typically well informed with products such as employers' liability insurance, public liability insurance and business interruption insurance. But if you have ambitions to grow your business, there are other types of insurance which should be in your thinking.

Credit cards and overdrafts prove to be lifelines for SMEs in Pandemic

• -> 54% of SMEs need to secure new finance in 2021, of these, 54% will apply for a loan through the Recovery Loan Scheme
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• -> 34% think the Government hasn’t done enough to support small businesses
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• -> 43% saw a fall of more than 25% in business income in 2020

Funding through Personal Guarantee backed loans could be only option.

Borrowing hit record levels in 2020 with almost half of the UK’s small and medium-sized businesses seeking out financial support – more than three times the level of the previous year – amid the coronavirus pandemic.

Interest on average Personal Guarantee backed loan through CBILS could reach £327,000.

The Office of Budget Responsibility has predicted a default rate of 40.4% on BBL and CBIL finance to SMEs, with £27.2 billion of loans expected to be written off^[i].  Purbeck Personal Guarantee Insurance, provider of the UK’s only Personal Guarantee Insurance to SME business owners and directors, is urging the 59%^[ii] of businesses revealed to have borrowed more than 20% of their turnover, to calculate their repayments and heed the insolvency warning signs.

• • CBILS loans worth £1.22bn revealed to have Personal Guarantee attached, average loan 300% more than UK house value at £766,000:

  • -> Freedom of Information request exposes high personal risk to SME owners
  • -> Average loan value £766,000
  • SME business owners could be on the hook for over £150,000 if their business fails
  • -> 39% of SMEs not aware of Personal Guarantee risks[i]
  • -> Concerns over size of loan repayments and awareness of personal guarantee risks

• 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.