57% of UK SMEs have a positive financial outlook for 2022, according to Legal and General’s annual State of the Nation research.

According to Legal & General’s findings, one in three are planning to expand their businesses in the next two to three years.

This optimism comes in spite of the fact that 75% of the UK’s small and medium size businesses now carry at least some external borrowing. This is up from 51% in 2019, when the research was last conducted.

In addition, 54% of founders or owners have used personal guarantees to secure their company borrowing which, in the event of a default, would pass the financial consequence onto themselves as individuals, increasing the associated risk.

The research shows Covid-19 has shifted perceptions of protection, with four in 10 businesses wishing that they had done more in advance with 50% of respondents also stating that the pandemic had made them more likely to consider insuring their business loans and putting protection in place in the event of the loss of their key people (47%).

97% of UK SMEs said they are looking to professional advisers for advice for protection.

Robert Betts, market development manager, Legal and General, said: “The past two years have been especially tough for small businesses and spotlighted the need for a comprehensive back-up plan. Businesses can no longer rely on government-backed schemes and easily accessible borrowing to protect against an unforeseen crisis.

“Our research has revealed that business owners are ready to discuss protection insurance solutions that could help them negate the financial impact of the death or long-term illness in their business. This presents an opportune moment for advisers to kickstart conversations with their clients about business protection and reiterate the value of their advice. As an industry, we have the tools at our disposable to support these conversations and help advisers protect both a business and family’s financial position.”