Almost three quarters (70 per cent) of start-up businesses have either secured or are planning to secure finance in 2021 to help support cashflow.
This comes after ONS data found that there has been an unprecedented rise in new company registrations in the first quarter of 2021, compared to the first quarter of 2020.
According to new analysis from Purbeck Personal Guarantee Insurance, 37 per cent of business owners signed a personal guarantee on their business loans in 2020, raising fears of loan stacking within the business borrower community.
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Purbeck has urged start-up businesses to consider personal guarantee insurance when shopping for finance.
“It is not uncommon for directors and owners to sign multiple personal guarantees but clearly there are serious ramifications if things go wrong given we are still in the midst of a great deal of pandemic related uncertainty and disruption caused by Brexit,” said Todd Davison, managing director of Purbeck.
“The good news is that personal guarantee insurance is stepping in to reduce the risk as savvy entrepreneurs in the UK collectively secured £35m of funding for a new venture in the past three years through personal guarantee backed loans that were protected by personal guarantee insurance.
“This means if the business does fail, 80 per cent of the loan will be settled by the insurance rather than the business owner’s home, savings and other personal assets being called on to settle the debt.”
Purbeck noted that the most popular funding routes for start-ups in 2021 were likely to be the recovery loan scheme, and credit card facilities.
15 per cent of the business-owners surveyed said that they would consider alternative finance providers, while nine per cent would seek out asset finance, eight per cent would consider crowdfunding, and seven per cent would look at invoice financing to secure the funding that they need.