With talk of a potential vaccine roll-out gathering pace, we can begin to consider what business life will look like after COVID-19. One thing’s for sure, it’s going to be markedly different from what life looked like before the pandemic, with some people dubbing the next phase the ‘new normal’.
So, what will the ‘new normal’ consist of for businesses? It’s not an easy question to answer and involves a fair amount of guesswork, but what has happened in the past year means we can make some informed predictions.
Will remote working become the norm?
Before the pandemic, the conventional wisdom had been that offices were critical to productivity and culture. Companies competed intensely for prime office space in prime locations around the world, with a focus on solutions that were seen to promote in-person collaboration.
But estimates from UK-based think-tank Centre for Cities suggest that four out of five Brits were working from home during lockdown. In comparison, only 30% of UK employees ever worked from home during 2019, according to the Office of National Statistics (ONS).
Distractions and lack of productivity have always been cited as reasons to keep workers in the office. However, home-working employees’ feedback is showing that employers do not need to worry about those potential complications after all, with as many as 65% of workers reporting they are more productive at home versus the office.
Going forward into 2021, we’re anticipating a more blended and flexible offering from employers, with less pressure to work in the office than there was before. While many people have enjoyed working from home, others are fatigued by it.
For businesses, it presents a possible opportunity to cut overheads by downsizing to a smaller office, away from prime locations, or even to do away with a physical space altogether.
Will lending be tightened post-COVID-19?
Traditional high street banks were painted as pantomime villains of the Global Financial Crisis a decade ago – but you could argue they have been the unsung heroes of coronavirus.
Traditional banks, with their huge resources, have been the backbone of delivering Bounce Back Loan Scheme (BBLS) loans to more than a million UK firms throughout the pandemic.
However, like many near-term emergency measures, the BBLS could have a knock-on effect on lending in 2021 and beyond.
Some firms that have taken a BBLS loan may struggle to pay it back, and banks might be forced or encouraged to handle these struggling businesses with a more sympathetic collections process.
Ultimately, however, this will drain their resources and distract their focus, making it harder for traditional banks to focus on new lending. Additionally, to reduce their credit risk, lenders might seek enhanced security over some assets of the borrower, namely a personal guarantee.
Signing a Personal Guarantee means that if your business becomes unable to repay a debt to the lender, you’re personally responsible. In other words, if your growth plans don’t quite come off and a claim is made under the guarantee, you (and any other guarantors) will be liable to pay the company’s debt, and your personal assets will potentially be on the line.
Should you sign a personal guarantee in 2021?
We’re in no position to advise on whether or not you should sign a personal guarantee should one be required in order to access additional funds from a lender.
However, it’s possible to take out insurance to cut the risk of financial loss when making a commercial credit application with a personal guarantee. Currently, there’s only one insurer offering personal guarantee insurance to small business owners: Purbeck.
Personal guarantee insurance provides business directors with cover if, following insolvency of their business, the lender calls on their personal guarantee.
It can be tailored to each individual, so you can state the amount you want to insure, and you can choose how many directors you’d like to be noted on the policy.
Purchasing this insurance policy will help to reduce the risk to your personal estate, leaving you to get on with running your business. Purbeck covers up to 80% of your risk, so you’re personally protected as you plan the future growth of your business.
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.