If your company, like many of today’s businesses, has some type of commercial debt secured against one or more of your key staff members, it is imperative for you to get business loan insurance to protect your business’ financial future against the loss of these individuals. Why? Read on to find out…

Commercial Debts

When considering business loan protection, it is important to realise that the term ‘business loan’ in this context does not just cover commercial mortgages and/or development loans but all commercial debts, including your company’s overdraft facilities and asset finance.

Most banks, commercial mortgage providers and other lenders/financial institutions require commercial debts to be secured against someone within the company.

The people against whom these debts are secured – the guarantors – are typically owners, partners, shareholders, directors and/or other key people within the company.

Unless your company has business loan protection in place, losing a guarantor through critical illness or death could have dire consequences for your business’ financial future…

What Happens When Guarantors Become Critically Ill of Die?

Guarantors are usually individuals who are of key importance to the smooth running and profitability of a business owing to their experience, leadership qualities, specialist skills and/or special talents.

Losing such an individual through critical illness or death could therefore have a significant impact on your company’s ability to continue trading, as well as, of course, its financial security.

You may, for instance, lose valuable contacts, contracts and/or the goodwill of both suppliers and customers – not to mention the cost of having to find and train a suitable candidate to replace this important lost individual.

What’s more, in the event of a guarantor’s death or a diagnosis of critical illness, outstanding business debts may have to be repaid immediately. Even if lenders do not demand immediate repayment in full and allow for debts to be transferred to the deceased guarantor’s estate, there is no guarantee that his/her next of kin/family will be able to take these commitments on.

Either way, your company could face having to find the resources to make the repayment, which, unless sufficient resources are available to you, could place a substantial financial burden onto your business at a time when its ability to continue trading, profitability and future growth are already at risk.

Getting business debt insurance to protect your company against the loss of guarantors is therefore of utmost importance.

Business Loan Insurance

Business debt or loan protection insurance protects companies against the detrimental impact losing a guarantor would have on their business. Taken out and paid for by a company, a business loan policy is essentially a life insurance policy to which critical illness cover may be added.

In the event of an insured guarantor being diagnosed with a critical illness (if this type of cover is added) or passing away, said policy will pay out a lump sum. This lump sum can then be used by the company to pay outstanding debts and, depending on the selected cover level, cover expenses (i.e. staff replacement/training costs) or help mitigate potential losses in productivity/profitability.

Contact Us

We have the in-depth know-how and experience to help your company set up business loan insurance tailored specifically to meet your business’ unique needs. Call us now on 01279 315 013 to learn more and/or request your free, no-obligation review.