Business owners cautioned to protect their personal assets as insolvencies reach 18 month high
Following news of an 18 month high in registered company insolvencies , Purbeck Personal Guarantee Insurance, the UK’s only provider of personal guarantee insurance is urging the owners of small and medium sized businesses to ensure their personal assets such as their home, bank account and savings, are protected if their business should become insolvent.
Purbeck estimates that over 420,000 small business owners in the UK were acting as personal guarantors for business loans prior to the pandemic. By providing a personal guarantee in support of a business loan, the director is providing the lender with recourse to his/her personal estate which, in effect, lifts the veil of incorporation afforded through a Limited Company or Limited Liability Partnership.
Furthermore, Purbeck has calculated that £2.1bn in CBIL loans were taken by business owners and directors which had personal guarantees attached[i].
Todd Davison, MD, Purbeck Personal Guarantee Insurance says “Many small and medium sized businesses are now facing a very bumpy ride as pandemic support measures such as VAT deferrals and the commercial rent moratorium, ease back. For those business owners who have taken the serious step of putting their personal assets such as their home and life savings on the line to secure a business loan, this will be a very worrying time. Personal Guarantee Insurance mitigates the risk, providing peace of mind that if the loan is called in, up to 80% will be settled by the cover.
“Part and parcel of cover is the provision of mentoring and support to businesses who do get into financial difficulty. As part of the cover we also provide a demand mitigation response service up to the value of £10,000 within our policy cover. This has been a key draw for policy holders – it’s not just about covering the risk of a Personal Guarantee, we are helping small business owners through a pretty turbulent and stressful times in their lives. This service offers expert support and advice at the point the debt needs to be settled, acting as a point of liaison for the lender.
“Knowing that as a business you won’t get left high and dry when things start getting tough is really valued by our policyholders and of course we have a vested interest in ensuring the success of our clients’ business. “With the Government support schemes starting to ease off, and access to finance increasingly likely to depend on signing a Personal Guarantee, Personal Guarantee Insurance will step in to help protect the UK’s SME owners and directors – in more ways than might be expected from an insurance product.”
[i] FOI Request in April 2021 for breakdown of CBILS loans secured over £250,000 where a personal guarantee was required by the lender, up to 31stMarch 2021
About Purbeck Insurance Services
Purbeck Insurance Services is a Personal Guarantee Insurance specialist supporting Small and Medium sized Enterprises (“SMEs”) and promoting business confidence
Insurance policies backed by Markel International Insurance Company Limited (“Markel”), an A-Rated insurer, as rated by A.M. Best (A), Fitch (A+) and S&P (A). Markel is a shareholder in Purbeck Insurance Services.
Purbeck Insurance Services is directly authorised and regulated by the Financial Conduct Authority
Insurance is underwritten by Purbeck Insurance Services, an authorised Managing General Agent (“MGA”) of Markel
Purbeck Personal Guarantee Insurance is annual insurance policy that provides Director(s) with insurance cover in the event their business lender calls in the Personal Guarantee (provided by the Director(s) as part of raising business finance)
Key features of Personal Guarantee Insurance:
- Premiums are competitively priced and based on individual circumstances
- Cover is available for Personal Guarantees signed to support a wide range of business finance facilities
For further media information please contact Alison Reeson at HSL on 07876 597466, or purbeck@harrisonsadler.com.
More in Finance
UK Bond Market: What You Need to Know
The UK government bond market is once again making headlines as yields on longer-term debt surge to levels not seen in decades. This latest development has raised concerns among investors and policymakers, presenting significant challenges for the government’s fiscal plans.
B4 Finance Ecosystem: The specific opportunities and challenges that women encounter...
Charles Stanley are committed to fostering a proactive approach to investing and their goal is to empower women to make well-informed financial decisions and capitalise on potential growth opportunities. They also strive to support women in crafting their unique financial narratives, enhancing their knowledge, and understanding of investment strategies, and building a robust and influential female network.
Understanding HMRC tax investigations: A guide for business owners
Simon Smith, Managing Partner at Wellers, discusses what business owners need to know about tax investigations, including whether you could be a target.
From this author
The Importance of Storytelling – How It Can Help Your Business
By sharing your business story thoughtfully, you show potential customers that you’re not just another company trying to sell something, but a trusted partner with a history and purpose. In a world of ‘fake news’ and scams, it’s important for every business to demonstrate its authenticity.
10 Reasons why Deeper Business Connections Help to Build Trust
Deeper business connections offer a range of significant benefits that can contribute to long-term success. Developing deeper connections in business is not just about transactional benefits but about creating a network of support that nurtures growth, collaboration, and resilience. At B4, we help businesses make connections and build relationships. Some of our Members have been with us for well over 15 years as being part of a trusted community of people and organisations that understand the value of trust is a crucial part of their network building strategy.
Raise’24 Demonstrates the Power of Collaboration and Team Effort
At Keble College on Friday 13th December, one hundred representatives of Oxfordshire’s business and charitable communities came together to celebrate months of incredible fundraising efforts and as they all stood at the threshold of the hugely impressive Great Hall, they had already raised well over £20,000. That total has now soared to £37,500 thanks to the generosity of well over 500 donors and the hard work of 33 fundraisers.