Business Loan Protection
Secure the financial health of your business
By helping you protect your business loans, we enable you to prepare for the worst if you lose one of your best.
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What is Business Loan Protection?
Business Loan Protection insurance is designed to help your company repay outstanding business loans, overdrafts, or commercial mortgages in the event that a key person—such as a business owner, director, or skilled employee—dies or is diagnosed with a critical or terminal illness.
It’s a strategic financial safety net that ensures debt doesn't derail your operations or burden surviving partners or shareholders.
How Does Business Loan Protection Work?
A Business Loan Protection policy pays out a lump sum if the person covered dies or suffers a specified critical illness (if included). This payout can be used to settle:
- Commercial loans
- Business overdrafts
- Director’s loans
- Venture capital repayments
This means your business can continue trading and meeting its obligations, without disruption or pressure from creditors.
Speak to an expertWhy Consider Business Loan Protection Cover?
Do I need business loan protection?
If your business has any form of borrowing tied to individuals—be it directors, partners, or employees with revenue-generating roles—then yes, Business Loan Protection is essential. It’s particularly vital for SMEs, start-ups, and companies with fewer resources to absorb sudden financial shocks.
Is business loan protection compulsory?
Not legally, but in many cases, lenders or investors will require it, especially for high-value loans or director-guaranteed borrowing. It’s also just smart financial management.
Choosing the Right Business Loan Protection Policy
We tailor your cover based on your company’s debt profile. Options include:
- Level Term Cover – A fixed lump sum benefit throughout the term.
- Decreasing Term Cover – Benefits reduce in line with your outstanding loan balance.
- Critical Illness Loan Protection – Optional cover for specified critical illnesses.
- Overdraft Protection Business Loan – Cover for ongoing access to overdrafts and flexible facilities.
Whether you need Business Loan Protection for SMEs or cover for a growing team with multiple funding sources, we help you compare providers and build a policy that works.
What Does Business Loan Protection Cost in the UK?
Business loan protection cost depends on factors like:
- Age and health of the insured individual
- Loan amount and repayment period
- Type of cover (level or decreasing)
- Whether critical illness is included
Our expert adviser will use a Business Loan Protection Calculator to assess your needs and request the best Business Loan Protection quotes out there. We’ll help you explore your options, including cheap business loan insurance without compromising on value.
Tax & Trusts
What You Need to Know
- Business Loan Protection Tax Deductible? Generally, no. Since policies protect capital rather than trading income, premiums aren’t tax-deductible.
- Business Loan Protection Trust – Particularly useful for traditional partnerships. The policy can be held in trust and written on an “own life” basis.
- Policy Ownership Business Loan Protection – Policies can be owned by the business or the individual, depending on structure and goals.
Tax treatments vary based on your structure. We’ll advise you based on the latest HMRC guidance and your unique circumstances.
Please note: This content is based on our understanding of UK tax laws as of 2025. Tax treatment may change. Always consult a qualified Broadbench advisor for personalised advice.
Resources for Business Owners, Contractors & Employers
Explore more insights to help you decide.
- Thinking it’s “not a priority” or “we’re too small for this”?
Read: Why Business Protection Matters — and see how risk is real, even for small businesses. - Learn how cover could apply to your specific loan scenario Read: What Would Happen to Your Business Loan If the Unthinkable Happened?
- You can't predict the future—but you can prepare. Read: The Business Protection You Haven’t Thought About
Downloadable Resources
- Case Studies - Business Loan Protection in action!
- Broadbench - Employee Benefits
- Broadbench - Tax and Financial Risks
- Broadbench Guide To Tax Savings
Want tailored advice?
Get in touch for Business Loan Protection quotes today. No hard sell—just clear, expert help to protect what you’ve built.
Speak to an expert
Ready to secure the cover that’s right for you?
Fill out the form below to arrange a time to speak to a Business Loan Protection expert.
FAQs
How do you take out business loan protection?
When a business takes out a loan, a specific shareholder(s) is usually responsible for repayment. Business loan protection is taken out on the individual responsible for the repayments. If the business is a limited company, the business itself is the policyholder. In the case of a partnership or sole trader, the individual owners hold the policy.
Our expert advisers can help tailor a policy to fit your business needs.
Is business loan insurance and key person insurance the same thing?
Not exactly. While key person insurance can sometimes be used to cover business loan repayments, there are key differences:
- Business loan insurance must match the outstanding loan amount to ensure full coverage of repayments.
- It must be in place for the duration of the loan, whereas key person insurance covers the length of a key individual’s employment.
What can business loan insurance cover?
Business loan insurance can cover various types of loans, including:
- Commercial loans or mortgages on business premises
- Venture capital loans taken during startup or expansion
- Director’s loans—funds paid to a director or their family that do not count as salary or dividends
Do you need to take out business loan protection?
No, there is no legal requirement to take out business loan protection.
However, lenders often require businesses to provide security to guarantee loan repayment, making business loan protection a highly recommended safeguard.
Can business loan insurance be transferred if the loan is refinanced?
Yes, in many cases, business loan insurance can be adjusted or transferred to cover a refinanced loan, as long as the coverage aligns with the new loan amount and terms.
What happens if the insured person leaves the business?
If the person covered by the business loan insurance leaves the company, the policy may need to be restructured or reassigned to a new individual responsible for the loan repayments. Our advisers can help ensure continuous coverage in such cases.