Record numbers of business borrowers took out personal guarantee insurance on loans, research claims.
Personal insurance guarantee provider Purbeck said it has seen policy numbers increase annually by 143 per cent.
The market sectors where business owners and directors have taken out the product are predominantly in construction, wholesale and professional services, the provider said.
Purbeck Personal Guarantee Insurance estimated that more than 420,000 small business owners in the UK were acting as personal guarantors for business loans prior to the pandemic.
It has warned that business owners should take out personal guarantee insurance to protect their personal assets in the event that their company becomes insolvent.
“Our data suggests businesses are keen to borrow as we get to the other side of the pandemic but may be facing a limited choice of options from lenders, outside of personal guarantee backed loans,” Keir Cox, operations director of Purbeck Personal Guarantee Insurance said.
“This is even with a strong trading position, as has been the case for the majority of applicants over the past month.
“The increasing demand for personal guarantees from lenders was an issue we foresaw as an outcome of the pandemic but while business owners may have little choice over signing a personal guarantee if they need access to cash, personal guarantee insurance is giving them the confidence to take on a loan without significant risk to their personal assets.”