Some timely advice for small business owners from Purbeck;
The temporary shutdown at Jaguar Land Rover (JLR) has sent shockwaves through the UK’s manufacturing and automotive supply chain, with thousands of jobs and small businesses facing serious financial uncertainty.
Although JLR is now starting to resume production, cash flow disruption for many suppliers and contractors dependent on JLR, has left some firms urgently seeking emergency funding to stay afloat. But experts are warning business owners to tread carefully when signing new loan or finance agreements that require a personal guarantee.
A personal guarantee is a legally binding promise made by a company director or business owner to personally repay a business loan if their company is unable to do so. This means that in the event of business failure, personal assets — including homes and life savings — can be at risk of repossession by the lender.
Purbeck Insurance Services, the UK’s leading provider of Personal Guarantee Insurance, is urging business owners in the automotive supply chain to protect themselves against that risk. The company’s specialist insurance offers directors a vital financial safety net, covering up to 80% of the guaranteed amount if the business becomes insolvent and the personal guarantee is called upon.
Todd Davison, Managing Director of Purbeck Insurance Services, commented:
“We’ve already seen an uptick in applications for Personal Guarantee Insurance from businesses connected to the JLR supply chain. Many of these firms are facing real liquidity pressures, and lenders are understandably asking for personal guarantees as security for emergency finance.
“Our message is simple — if you are being asked to sign a personal guarantee, make sure you understand the risk and consider protecting yourself. Losing your business is devastating enough; you don’t want to lose your home and personal savings too.”
Purbeck warns that smaller suppliers are particularly exposed, as many rely heavily on a single manufacturer for income. The company is advising directors to seek professional advice before signing any agreement that includes a personal guarantee and to consider Personal Guarantee Insurance as a safeguard in these uncertain times.
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