Applications for Personal Guarantee Insurance for new business loans have doubled in the space of three weeks in September, according to Purbeck Insurance Services, provider of the UK’s only Personal Guarantee Insurance.
This sudden increase in demand is a “clear indication” that small businesses are increasingly looking outside of the Government loan schemes for funding, according to the group.
The news follows reports that many financial institutions have cut access to state-backed loans, despite the scheme being extended until the end of next November.
Purbeck is now urging the Government to “do more now” to protect small businesses over fears that reduced access to emergency funding will lead to “unprecedented levels of late payment and bad debt”.
Todd Davison, MD of Purbeck said: “We welcome the launch of the late payment consultation[ii] 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.
“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.”
He added: “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.”