Business Loan Protection
Business Loan Protection
If you have taken out a finance facility for your business, have you got a safety net if the worse was to happen?
The total value of business loans is expected to be £513 billion in 2023 with the average small business loan in 2022 was £14,000.
If your business has taken out a finance facility, have you thought about how you would be able to keep up with the monthly repayments if the person who is liable for the finance agreement unfortunately passes away or was diagnosed with a critical illness?
If your business has taken out a finance facility, have you thought about how you would be able to keep up with the monthly repayments if the person who signed the finance agreement unfortunately passes away or were diagnosed with a critical illness?
Business Loan Protection could give your business a financial lifeline in the event something was to happen to the owner of the finance agreement. If there are multiple directors or shareholders who have responsibility for the finance agreement, joint policies are available.
What type of outstanding borrowing does it cover?
Business loan protection can cover:
- Commercial Loans
- Commercial mortgage
- Director’s loan
- Personal guarantees
Why consider Business Loan Protection?
No matter what happens in your business, a lender will still want to receive their monthly repayment for your loan amount. Being unable to repay your loan can have serious consequences to your business.
Depending on the finance agreement, you could see your assets, personal home and/or commercial property repossessed, face late fees whilst negatively effecting your credit score.
What are the tax implications with a business loan protection?
The insurance is initiated as collateral security for a loan, premiums paid will not be treated as a deductible expense from profits for corporation tax purposes.
They will be regarded as part of the cost of rising capital. Benefits will be treated as a capital receipt and not taxed.
What does a Business Protection Policy Cover?
A business loan protection policy is similar to a personal life insurance policy which is taken out to cover a mortgage but it will cover any outstanding business loans. In the majority of cases, you can protect the full amount with life cover or life and critical illness cover.
In the event that you need to claim, the sum insured is paid to either the business or directly to the lender to cover the outstanding finance amount.
What are the levels of cover available?
Life Insurance Only: In the event that you or one of the policyholders passes away, your business loan protection will pay out what is left remaining on the finance agreement.
Life Insurance and Critical Illness: In the event that you or one of your policyholders passes away or is diagnosed with a critical illness, your business loan protection will pay out what is left remaining on the finance agreement. A critical illness will need to be one that the insurer covers.