Millions of small businesses vulnerable as £672bn of business loans go unprotected


Thursday, February 10, 2022 7:09 a.m.

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Around £672bn of corporate borrowing by SMEs is unprotected, which could leave businesses vulnerable to any future financial shocks.

New data from Legal & General, shared exclusively with AM City this morning shows that three in four small and medium-sized businesses in the UK have some form of corporate debt, with an average borrowing of £200,000.

While 75% of the UK’s 5.6 million SMEs are struggling with this debt, it is estimated that around 20% have protected their loans with appropriate insurance products.

However, around £672bn of business loans are today unprotected in the SME sector.

Additionally, this current estimated figure does not include SME owners who have supported their businesses by injecting cash through personal loans, overdraft facilities or credit cards.

Personal guarantees

More than half of UK SME owners have also given personal guarantees to secure their loan, risking their financial wellbeing and that of their families for the good of their business, said Robert Betts, head of market development at Legal & General.

When personal guarantees and other forms of credit are taken into account, the overall business protection gap is estimated to be in the billions of dollars.

“Most small businesses rely on a handful of decision makers to keep things going, sparing little thought about what might happen if one of them is diagnosed with a serious illness or sadly dies,” Betts said. AM City today.

“Can the company repay its financial obligations without these people? What plans do they have to ensure the business can continue? »

“The huge business loan protection gap is a stark reminder that businesses can no longer afford to ignore these issues and must consider protecting their borrowings,” Betts added.


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