Almost 60% of SMEs use credit to cover insurance 

The research was conducted by finance provider Premium Credit, whose Insurance Index monitors insurance buying and how it is financed.

It revealed the average amount borrowed is SMEs is £1,105.

Almost one in 10 (nine percent) of SMEs who utilise credit to cover insurance said they had borrowed over £3,000.

Over a fifth (21%) said they had taken on more credit over the past 12 months for the purposes of insurance, but 24% said they had borrowed less and 37% are borrowing the same amount.

Among the businesses using more credit, 43% said it was due to the ongoing impact of the Covid-19 pandemic, and 30% said it was because their organisations had taken on more credit for other purposes, so did not have the cash to pay for insurance.

Around 29% blamed rising premiums, and 28% put it down to dropping incomes.

Almost half (44%) used credit to cover vehicle insurance, closely followed by property insurance (39%). Nearly a third (29%) took out more credit to pay for public and product liability insurance, and 28% used it for employer liability insurance.

Owen Thomas, chief sales officer at Premium Credit commented: “Credit plays a vital role in ensuring that businesses continue to have the right type and level of insurance that they need across their operations.”