Post pandemic loan scheme for SMEs is welcomed but caution is needed on personal guarantee requirements
April 2022: Following a report in the Financial Times this week suggesting that[i] a permanent replacement for the loan schemes offered to small and medium sized businesses in the pandemic is in the pipeline, Purbeck Personal Guarantee Insurance, has welcomed the move but urges caution over personal guarantee requirements which could prove a barrier to […]
April 2022: Following a report in the Financial Times this week suggesting that[i] a permanent replacement for the loan schemes offered to small and medium sized businesses in the pandemic is in the pipeline, Purbeck Personal Guarantee Insurance, has welcomed the move but urges caution over personal guarantee requirements which could prove a barrier to take up.
Based on a survey by Purbeck, 53% of SME business owners already had personal guarantees in their name for a business loan at the end of 2020 and a further 9% took a loan with a personal guarantee in 2021[ii].
Todd Davison, MD of Purbeck Personal Guarantee Insurance says: “The Recovery Loan Scheme (RLS) closes to applicants at the end of June but uptake has been far below what was expected. We believe this is in large part due to the strict qualifying criteria. It has become increasingly clear that there would need to be a long-term successor to the Enterprise Fund Guarantee[iii] which was in effect ‘mothballed’ when the pandemic hit and businesses needed faster access to funding.
“If a new lending scheme can help to support SMEs in underserved markets and promote the levelling up and ESG agendas, it can only be a good thing but there needs to be close attention to the level and requirements for personal guarantees given the personal risks they pose to business owners if insurance has not been put in place.
“On the one hand, many SME owners and directors are emerging from the pandemic having already taken the significant step of signing a personal guarantee for business a loan. On the other, those business owners who have avoided signing a personal guarantee so far, may be deterred from applying for funding if this is a requirement. A delicate line needs to be found in setting personal guarantee requirements at the right level and more awareness needs to be built around the ways business owners can mitigate the risks to make this decision much less stressful. We are keen to work with the Government and lenders to help build this awareness and deliver greater peace of mind to UK SME owners and directors.”
A Freedom of Information request by Purbeck Personal Guarantee Insurance in 2020 revealed that the Enterprise Finance Guarantee supported £1.033bn in loans in the prior 5 years – of which £286m (just under 30%) was backed by Personal Guarantees signed by the owners/directors of small and medium sized businesses applying for funding. The average annual lending under the EFG during this time was £206 million – this is significantly lower than the funding provided under CBILS and the RLS.
Ends
Notes to Editors
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
Professional Risks PGI is an insurance policy that provides financial peace of mind to Directors of solicitors firms when signing Personal Guarantees in support of run-off premium. The policy indemnifies a defined contribution towards the sum insured (see below) as set out in the policy schedule. The insurance policy provides the Director with unlimited access to a Support Desk which provides proactive advice, assistance and claims service.
For further media information please contact Alison Reeson at HSL on 07876 597466, or purbeck@harrisonsadler.com.
[i] https://www.ft.com/content/a871146e-a996-4d73-81ed-7eab20ec375a?segmentId=bf7fa2fd-67ee-cdfa-8261-b2a3edbdf916
[ii] Survey of 1000 SME business owners in April 2021 for Purbeck by Gorkana/Cision
[iii] https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/about-efg/
More in Insurance
Applications for personal guarantee backed small business loans up 50%
Headline figures: 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’ […]
Calling It All Off: Cancellation Insurance for Festivals
With the worsening unpredictability of British weather and terrorist threats increasing, arts organisations and events companies across the country are shoring themselves up with cancellation insurance. Even if it’s a free event with no ticket revenue at stake, cancellation insurance can cover lost expenditure. Key risks include: Adverse weather for outdoor events: water-logging or high […]
Sunak’s Spring Statement Must Support Small Businesses
Purbeck Personal Guarantee Insurance Issues Wish-List to Chancellor March 2022: Ahead of the Chancellor’s Spring Statement on 23rd March 2022, Purbeck Personal Guarantee Insurance, the provider of personal guarantee insurance to small business owners, is urging Rishi Sunak to consider key measures to support small businesses following news that company insolvencies doubled in February[i]. […]
Trending
B4 Sustainability Ecosystem: The Sustainable Business Handbook
One of the country’s leading experts on responsible business will be talking about how SMEs can address the issues around climate change while improving their businesses at a free lecture in the Unipart Conference Centre on 11th July at 6pm
Wellbeing at Work and Functional Resilience
Melissa Noton, co-Leader of B4’s Wellbeing Group, will be talking to the Head of Oxford Health’s Wellbeing department, Roz O’Neil, about staff pressures, their accumulative nature and the need to support a level of functional resilience, organisational agility and leadership.
CEO FOCUS: Gary Headland, Activate Learning
In the first of a series of regular interviews from CEO’s in and outside of the B4 community, we meet new Activate Learning CEO, Gary Headland.
From this author
Tracker and Surrey Police outwit professional thieves who steal prized Porsche...
LONDON, U.K. – May 2022 — Professional thieves who set their sights on a Porsche 911 Carrera and planned its theft while its owners were on holiday abroad, have been outsmarted by stolen vehicle recovery (SVR) expert Tracker and Surrey Police. The thieves, who forced entry to the owner’s Epsom home to seek out the […]
How to avoid thieves from spoiling a summer staycation
Tracker urges owners to be extra vigilant and safeguard caravans as holiday season approaches LONDON, 19th May 2022 – Stolen vehicle recovery (SVR) expert, Tracker Network (UK) Ltd , is urging caravan and motorhome owners to be vigilant when it comes to protecting their vehicles in the run up to the summer holidays. The UK’s […]
Applications for personal guarantee backed small business loans up 50%
Headline figures: 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’ […]