Business borrowers told to prepare for possibility of signing PGs
An insurance firm has claimed business owners considering a loan as the new financial year approaches should prepare for the likelihood they may need to sign a personal guarantee.
Todd Davison, managing director of Purbeck Personal Guarantee Insurance, said small- and medium-sized enterprises (SMEs) need to fully understand the risks and how to mitigate them.
Read more: Record numbers of business owners take out personal guarantee insurance
This comes as the insurance firm found SMEs have been resilient during the pandemic, with over a third of firms (34 per cent) reporting they took no measures at all to deal with the Covid crisis over the past year.
There was a mixed response regarding recruitment however: 12 per cent said the business they worked for increased headcount during the past 12 months, compared to 14 per cent that cut staff numbers.
Nine per cent of respondents said employees at their company had more hours in 2021 and eight per cent worked for a firm that found new investment in the past year.
Read more: Calls for ‘pay as you grow’ support for SMEs
Read more: Businesses warned to act quickly as insolvency support comes to an end
“It is hugely encouraging to understand that over a third of SMEs were able ‘keep calm and carry on’ without recourse to government support or taking their own measures to cut costs,” said Davison.
“While we seem to be reaching the other side of the pandemic, it will be the survival of the fittest in 2022 as businesses face increased running costs and the continuing challenges over late payment of invoices.
“We would urge any business owner considering a loan as the new financial year approaches, to prepare for the likelihood that they will need to sign a personal guarantee, fully understand the risks and most importantly how to mitigate them.
“New funding should not mean unnecessary risk for business owners, particularly after such a tumultuous two years.”