Credit, Collections & Insolvency News
Following news of an 18 month high in registered company insolvencies, Purbeck 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 £2.1 billion in CBIL loans were taken by business owners and directors which had personal guarantees attached.
Todd Davison, MD, Purbeck Personal Guarantee Insurance said “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.”