The temporary suspension of production at Jaguar Land Rover (JLR) on 1 September this year created significant disruption across the UK’s automotive supply chain, with many smaller manufacturers and contractors reporting cash flow difficulties.

Although JLR has now begun restarting operations, the interruption left numerous suppliers seeking short-term funding to bridge gaps in income. Finance providers confirmed that a growing number of business owners were being asked to sign personal guarantees as a condition of securing loans, a move that could put their personal assets at risk if their company failed.

A personal guarantee is a legal commitment by a company director or business owner to repay a business debt personally if the firm cannot meet its obligations. Purbeck Insurance Services, which provides insurance cover for directors against this type of exposure, said it had seen a rise in demand from businesses linked to the JLR supply chain.

“We’ve already seen an uptick in applications for Personal Guarantee Insurance from businesses connected to the JLR supply chain,” said Todd Davison, Managing Director at Purbeck Insurance Services. “Many are facing liquidity pressures, and lenders are understandably asking for personal guarantees as security for emergency finance.”

Mr Davison added that business owners should “understand the risk and consider protecting themselves”, warning that losing both a business and personal savings was a real possibility for some.

Richard Chadwick, Chief Risk Officer at Simply Asset Finance, said smaller firms were particularly exposed to disruption of this kind. “Even a relatively short business interruption or contraction in demand can result in a real financial squeeze,” he said. He added that “flexible payment terms and agile refinancing” could help reduce the need for directors to risk their homes or other assets.

The wider economic impact of the shutdown remained significant. Around 30,000 people are directly employed at JLR’s UK facilities, with an estimated 100,000 working for firms in the associated supply chain, according to the BBC.

Michael Beese, Managing Director of Walsall-based Genex UK, which manufactures pressed metal parts, told the BBC that production halts had left his firm with “a finite element of cash” and forced the temporary layoff of most of his 17 employees. He said commercial lending options had proved expensive, with one offer carrying a 16% interest rate and requiring a full personal guarantee.

While he welcomed the government’s £1.5bn loan guarantee for JLR, believed to be the first instance of such support following a cyber-attack, Mr Beese questioned how quickly it would reach suppliers further down the chain. He suggested that similar guarantees could be extended to smaller businesses.

The BBC also reported that the Greater Birmingham Chambers of Commerce, along with the Black Country and Coventry & Warwickshire chambers, have written to the Department for Business and Trade urging clearer guidance on how the support package would be distributed. The chambers, representing about 5,000 firms, said “many companies are running out of cash and have no guarantee of future sales” and called for additional measures such as employer National Insurance contribution holidays to ease short-term financial pressures.

Industry observers said the episode highlighted the fragility of cash flow within the motor finance supply chain and the growing role of personal guarantees in securing emergency funding.