Press releases

£672 billion of SME borrowing is unprotected, according to Legal & General

Legal & General estimates a business protection gap of £672 billion for SMEs, with an overall business protection gap estimated to extend into the trillions.

14 Feb 2022

Full press release

Following their annual State of the Nation research, Legal & General estimates that £672 billion of corporate borrowing by SMEs is unprotected, leaving them vulnerable to any future financial shocks.

The data revealed that 75% of the UK’s small and medium size businesses are carrying some form of corporate debt, with an average borrowing of £200,000. If 75% of the 5.6 million SMEs across the UK are grappling with this debt, it is estimated that around 20% have protected their borrowing with appropriate insurance products, Legal & General estimates that £672 billion of business loans are unprotected in the SME sector today.

SMEs will need to dig deep to turn this corner

However, this current estimated figure does not include SME owners who have supported their businesses by injecting cash via personal loans, overdraft facilities, or credit cards. Over half (54%) of UK SME business owners have also given personal guarantees to secure their borrowing, risking the financial wellbeing of themselves and their families for the sake of their enterprise. When taking personal guarantees and other forms of credit into account the overall business protection gap is estimated to extend into the trillions.

Robert Betts, Market Development Manager, Legal and General: "Not only is the business loan protection gap endangering the future prospects of SMEs, but it’s time that business owners considered the ‘bigger picture’ of the financial risks they and their business could face in the event of the death or serious illness of themselves or key employees. When SMEs struggle to stay in control of their finances, it can have a knock-on effect on their ability to pay employees and suppliers, cover operating costs and pursue growth opportunities. The cocktail of multiple pressures combines to threaten their day-to-day livelihoods.  

Speaking with an adviser can help mitigate the wider effects of debt as they can help identify and implement the right policy to protect a person’s business against any future financial shocks without compromising the owner’s personal finances.”

Further information

Notes to editors

Established in 1836, Legal & General is one of the UK’s leading financial services groups and a major global investor, with £1.2 trillion in total assets under management (as at FY23) of which c40% (circa £0.5 trillion) is international.

We have a highly synergistic business model, which continues to drive strong returns. We are a leading international player in Institutional Retirement, in Retail Savings and Protection, and in both public and private markets through our Asset Management division. Across the Group, we are committed to responsible investing and dedicated to serving the long-term savings and investment needs of customers and society.

As at 7 June 2024, we estimate the Group’s Solvency II coverage ratio to be 224%.

As at 11 June 2024, Legal & General has a market capitalisation of £14.6 billion.

Legal & General Insurance (LGI) has been offering life insurance cover since 1836 and is the UK’s number one individual life insurance provider. Our group protection business in the UK offers life insurance and income protection products to individuals through their employers and we offer term-life insurance in the US. We now have over 5.5 million UK life insurance customers, 1.8 million people in group protection schemes and approaching 1.3 million US term-life insurance policyholders. Here in LGI, we protect our customers and their loved ones throughout life and death.

*at 31 Jun 2021