INCREASING numbers of small businesses are seeking personal guarantee insurance when taking out a loan.
Purbeck Insurance Services said it has seen a 23 per cent boost in the the number of personal guarantee protection policies sold in the first six months of 2019.
A personal guarantee is often a requirement for a business loan, particularly for small businesses, and is signed by the director or directors giving a guarantee that if the loan is not paid, their personal assets including their home can be used to settle the debt.
The insurance offsets any outstanding obligations that are called in by a lender.
Most small business owners buy protection for loans of £25,001-£50,000 and the demand for insurance protection for this bracket has grown 38 per cent, Purbeck said.
The number of policies for loans of £50,000-£75,000 has risen by 138 per cent over the same half year period.
Small business owners aged 46-60 were the most common purchasers of personal guarantee insurance – this age group bought 26 per cent more policies in the first half of this year.
“Demand for personal guarantee Insurance from small business owners has shown a marked increase in the first six months of 2019,” Todd Davison, director for Purbeck Insurance Services, said.
“It’s a strong indicator of the uncertainties many businesses are facing.
“Those that are beyond start-up mode are being particularly shrewd, by taking action to protect their personal assets as they actively seek finance to secure their business’s future.
“The economic environment we are operating in today is unprecedented and small businesses are evidently looking for ways to build their financial resilience as the clock counts down to the Brexit deadline of 31 October.”
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