5th March 2020

How exposed is your business borrowing?

By Sam Mistry
woman leader business meeting

Like many business owners, you may have borrowed money to provide the working capital you need to run your business. You may have borrowed this money from the bank or lent your own capital to the business.

Owners’ loans

Lending your own money to your business has many advantages when it comes to tax and flexibility. However, you might not be aware that in the event of an owner dying these loans are immediately repayable to their estate. This usually means that the business would need to turn to the bank to replace that borrowing. The alternative is that your business could face the possibility of expensive legal action with the deceased’s legal representatives.

Bank loans

If you have a bank loan you will need to consider how you would service this loan if you lost a key business owner or manager through death or serious illness. Could you guarantee that the bank would be party to a recovery plan, or would they just recall the overdraft and close the business down?

Personal security

This is even more important if you have been asked to provide personal security, where the bank has taken a charge over your house. This could mean that in the event of your death your family could be reliant on your co-owners’ ability to service the debt to keep a roof over their head.


We can show you the most cost-effective ways of protecting your company and your family. If you have existing cover in place, we may be able to find a better value alternative with our in-depth research of the market.

Try our free Key Person insurance calculator for an indicative quote

To find out how we can help protect your business through key person insurance or other insurance options, call the Aston Lark Employee Benefits team on 020 7543 2818 or email [email protected]

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