The owners of small and medium-sized businesses have more than £1.2 billion of personal liabilities linked to emergency Covid-19 loans, putting their personal assets on the line if their company does not survive the pandemic.
The use of personal guarantees in state-backed Covid-19 lending schemes was restricted after an outcry. However, figures revealed after a freedom of information request show that 1,587 directors agreed to them when taking on credit through the coronavirus business interruption loan scheme.
Personal guarantees make business owners personally liable for debts taken on by their company. Banks originally sought them on coronavirus business interruption loans of all sizes, but amid widespread criticism the rules of the scheme — in which the taxpayer underwrites 80 per cent of the debt —
