Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS)[ii] and the Recovery Loan Scheme (RLS).

Purbeck’s analysis shows that over 145,000 BBL loans worth £3.8 billion are in default as businesses continue to battle economic headwinds.

The findings come as latest estimates show that of £47bn paid out in Bounceback Loans, £17bn is already expected to be lost, £4.9bn of that - over 10% of the loans - to fraud.

A total of 9% of Bounce Back Loans are currently in default, down fractionally from 12% in July 2022 with the average loan in default standing at £26,571.

While there are fewer CBILS loans in default - under 2% - this is a small rise on July last year when 1% of loans were in default. The average amount owed is £175,000, from £164,000 in July 2022.

The analysis has also uncovered that businesses are typically borrowing £210,000 under the Recovery Loan Scheme which is open for applications until June 2024, and the average personal guarantee commitment made by business owners to secure a loan under the Scheme is £472,000.

Todd Davison, managing director of Purbeck Personal Guarantee Insurance, said: “The fractional reduction in BBLS debt levels and increase in CBILS defaults is not overly surprising given the economic environment. The lower level of defaults in CBILS can be attributed to the 80% Government Guarantee leaving 20% the responsibility of the business owner to pay back if the business fails.

“At Purbeck, we saw many CBILS applicants take personal guarantee insurance to mitigate that risk. What is very clear is that the RLS has provided a solution to those businesses seeking bigger amounts of cash but again this comes with a risk in the form of a personal guarantee.

“Most forms of business funding are now requiring personal guarantees from the owner/director to mitigate the risk. It’s why in the first quarter of this year more SME owners applied for personal guarantee insurance (PGI) to mitigate the risk of business failure, than at any time previously. The number of applications for PGI for business loans was up 93% year on year in Q1 2023.”