In a significant boost for the UK’s small business sector, more small enterprises applied for finance to support growth initiatives in the second quarter of 2024 than at any time in the past three years. This is according to the latest analysis by Purbeck Insurance Services, the UK’s sole provider of personal guarantee insurance for small business loans.
Purbeck’s data reveals a notable shift in the purpose of these loans. In Q2, 19% of small business owners securing personal guarantee backed loans did so for investment in growth initiatives. This marks the highest level since Purbeck began collecting this data in Q1 2021. Conversely, loans secured for working capital fell to 31%, the lowest level since Q3 2022, down from a peak of 37% in Q1 2024.
The findings from Purbeck highlight several key trends:
- Increased Appetite for Growth Finance: 19% of applications were aimed at growth initiatives, the highest proportion recorded to date.
- General Election Influence: June 2024 saw a surge in applications for personal guarantee insurance, making it the second highest month on record, likely influenced by the announcement of the General Election at the end of May.
- Rising Demand Year on Year: There was a 69% increase in applications for personal guarantee insurance for small business loans in Q2 2024 compared to Q2 2023.
- Rising Insurance Cover Amounts: The average cover for a personal guarantee has risen to £195,051, a 33% increase from the same quarter in 2023. In the construction sector, this average cover soared to £230,910, the highest level recorded.
- Loan Types: 40% of applications for personal guarantee insurance were for unsecured loans, while 16% were for secured loans. Asset finance accounted for just 8% of loans, with invoice finance loans dropping to a record low of 5% of applications.
Todd Davison, Managing Director of Purbeck Insurance Services, commented on the data: “The General Election was announced at the end of May and within days we saw a marked uplift in applications for personal guarantee insurance for personal guarantee backed small business loans. This, and the notable rise in loans for growth initiatives, suggests a turnaround in confidence in the small business community after a tough few years.”
He added, “The new Government will now need to deliver on its promises and help ensure that any barriers to finance for small businesses are broken down. This should include making small business owners aware that they may need to sign a personal guarantee for a business loan. Being open to this idea will improve their options, and they can mitigate the risk with personal guarantee insurance being one solution.”
Purbeck Insurance Services, a specialist in personal guarantee insurance, supports Small and Medium-sized Enterprises (SMEs) and promotes business confidence. Their insurance policies are backed by Markel International Insurance Company Limited, an A-rated insurer. Purbeck is directly authorised and regulated by the Financial Conduct Authority, operating as an authorised Managing General Agent of Markel.
For further media information, contact Alison Reeson at HSL on 07876 597466, or via email at [email protected].
