1 in 5 small business owners keep quiet on personal guarantee risk


A survey of 1000 small business owners[i] by Purbeck Personal Guarantee Insurance has found that over 1 in 5 (22%) has not told their life partner that they have signed a personal guarantee. If the business defaults on a personal guarantee backed loan, the director’s home, car and anything in their personal bank account could be called on to settle the outstanding debt. Personal Guarantee Insurance mitigates this risk. With business failures at their highest since 2017[ii] and start-ups also up in Q3 2021[iii], Purbeck is urging new business owners to start on the right foot. Purbeck has revealed that start-up loans to the value of £34.6m have been protected by this innovative new insurance to date. The five top sectors where business owners are taking advantage of Personal Guarantee Insurance are:

  1. Construction

  2. Manufacturing

  3. Food and Beverages

  4. Leisure, Arts and Recreation

  5. Business Services and Administration

Todd Davison, MD for Purbeck Personal Guarantee Insurance, said: “We have estimated that over 420,000 small business owners in the UK were acting as personal guarantors for business loans prior to the pandemic. Furthermore, around £2.1bn in CBIL loans were taken by business owners and directors which had personal guarantees attached[iv]. “The problem is that SME access to finance is increasingly going to necessitate signing a Personal Guarantee as lenders become more risk averse. If a small business owner hasn’t yet faced this prospect, they probably will. Being open with those closest to you about this decision is the best policy as a Personal Guarantee is a heavy burden for any business owner to carry on their own. It is also crucial SME owners and directors understand how they can mitigate the risks with Personal Guarantee Insurance becoming an increasingly common option. Putting this kind of protection in place could certainly make the news more palatable.”

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