A survey of commercial finance brokers undertaken by insurance provider, Purbeck, has uncovered an increasing demand by lenders for personal guarantees to secure business finance.  In the survey, 47% of brokers said they had seen a rise in demand for personal guarantees as part of a new business finance package, in the past year.  This is further evidenced by the fact that Purbeck saw a 173% year on year increase in demand for personal guarantee insurance in October 2019, with a record peak that month in new policies underwritten.

The survey findings suggest that while the Government is encouraging lenders to sustain access to finance for small businesses, the reality is that lenders are tightening their lending criteria, increasing the pressure on business owners to put their personal assets on the line in order to access that finance.

The study also revealed that 49% of brokers anticipate demand for finance from SMEs will increase if the UK leaves the EU without a deal in 2020.  While 30% were unsure what a ‘no deal’ Brexit would do to the demand for finance, only 21% are not anticipating a rise in the demand for finance.

Todd Davison, Director at Purbeck said “The fact that we saw our highest peak in new business in October, when the UK was expected to leave the EU, would suggest not only the increasing demand for finance but that business owners are looking for solutions to mitigate the risks of the personal guarantees being demanded.”

“It also underlines the valuable role finance brokers, accountants and other business finance experts can play in introducing personal guarantee insurance to their clients – 92% of the brokers we surveyed said they would introduce personal guarantee insurance to their clients and almost all of the broker respondents (96%) said that their clients would value the protection offered.  Clearly this type of solution has a strong part to play in the proposition brokers and accountants can offer to the owners and directors of UK SMEs.”