What happens to your business debt if you unexpectedly lose a shareholder?
Many businesses use debt as a form of finance. Usually, in securing this debt the bank or lender would require a personal guarantee from one or all of the business owners.
If one of your business partner’s suffered a serious illness and couldn’t keep working in the business or even passed away, what would happen to the business debt? Have you thought about business insurance?
By having business debt protection, you can protect the owners of the business and also their families from debtors. For example, having adequate life cover for each shareholder’s portion of debt would free the remaining shareholders from the burden of repaying additional debt and may free their families from any personal guarantees.
What about other debt?
It is not only a bank or lender debt that is important to think about. There are obligations that must be met even if a shareholder is not working such as the contract for the car the business may have hired, the lease on the property the business is operating from and even the contract for the photocopier.
In the examples above the business would continue to have financial obligations even though it may have a reduced turnover due to losing a shareholder. For this reason, it may be worthwhile considering a type of cover that will ensure business continuity. After all, you may return to work within your business after a period of recovery and the last thing you want to find is the erosion of your business.
If you would like to learn more about protecting your business and your family, click here to speak to an experienced adviser who understands what business insurance is all about.
- Will Coronavirus Affect my Income Protection or Redundancy Cover?
- Do you really need income protection insurance?
- Managing the wait period and benefit period on your Income Protection Insurance
- What You Should Know About Income Protection Insurance if You Are Self-Employed
- What is the process to get income protection insurance?