Almost six out of ten (59 per cent) UK small and medium enterprises (SMEs) are relying on credit to pay their insurance costs, due to rising premiums and lower incomes linked to the impacts of Covid-19.
On average, UK SMEs have borrowed £1,105 to pay for insurance costs, while nearly one in ten have borrowed more than £3,000 to ensure they are properly covered, according to new research shared exclusively with City A.M.
Of those using credit to pay their insurance, two-fifths (41 per cent) are using credit cards while a further 34 per cent are using finance from their insurers, the figures from Premium Credit show.
All in all, the UK’s small businesses blamed Covid for their borrowing, as 43 per cent said they were using more credit due to the impacts of the pandemic.
At the same time, 29 per cent said rising premiums had forced them to borrow while 28 per cent said a drop in income had pushed them into using credit to pay for cover.
The study found that eight per cent of those who said they had begun borrowing money to pay their insurance costs said their premiums had increased dramatically, while another 47 per cent said they had experienced slight increases in their premiums.
In response to rising premiums, 15 per cent have cut investments in their business while 14 per cent have reduced their level of insurance cover.