Over half or 57 per cent of the UK’s SMEs businesses have a positive financial outlook for 2022, according to Legal and General’s annual state of the nation research.
According to the research, one in every three businesses plans to expand in the next two to three years. But 75 per cent of the UK’s small and medium-sized businesses, now have some external borrowing. This is up from 51 per cent in 2019 when the survey was last conducted.
More than half, or 54 per cent, of founders or owners, have used personal guarantees to secure their company borrowing, which, in the event of a default, would pass the financial consequences onto themselves as individuals, increasing the associated risk.
The research shows that Covid-19 has shifted perceptions of protection, with 4 in 10 businesses wishing they had done more ahead of time, and half of the respondents, or 50 per cent, stating that the pandemic had made them more likely to consider insuring their business loans and putting protection in place in the event of the loss of their key people, or 47 per cent.
Legal and General market development manager Robert Betts says: “The past two years have been especially tough for small businesses and spotlighted the need for a comprehensive backup plan. Businesses can no longer rely on government-backed schemes and easily accessible borrowing to protect against an unforeseen crisis.
“Our research has revealed that business owners are ready to discuss protection insurance solutions that could help them negate the financial impact of the death or long-term illness in their business. This presents an opportune moment for advisers to kickstart conversations with their clients about business protection and reiterate the value of their advice. As an industry, we have the tools at our disposable to support these conversations and help advisers protect both a business and family’s financial position.”