Applications for insurance on new business loans doubled in September, Purbeck Insurance Services has revealed.
Over the course of the first three weeks of September, Purbeck saw a spike in applications for personal guarantee insurance on new business loans, reflecting concerns around the end of the government-backed lending schemes.
The deadlines for these schemes have since been extended, and the government has launched a consultation to support small businesses and resolve late payment issues.
“We welcome the launch of the late payment consultation but the remedies won’t be in place until we are well into the new year – this will be far too late for many small firms as they struggle to get the emergency finance they need right now,” said Todd Davison, managing director of Purbeck Insurance Services.
“Those small businesses who give up securing a government loan and start looking for funding independently could also see tighter restrictions and demands for personal guarantees in return for access to much needed cash.
“It’s vital small businesses take measures to protect themselves from the risks of providing personal guarantees or we could see thousands of business owners losing their homes as well as their businesses.”
Purbeck specialises in personal guarantee insurance, which offers protection against the risk of a personal guarantee being called in by a lender. It is generally used by business owners who are seeking new funding lines.