Rise in confidence to secure finance amongst SMEs

10th October 2023

The number of SME owners securing personal guarantee insurance (PGI) for a business loan doubled in September 2023 compared to the same month in 2022 according to research byPurbeck Personal Guarantee Insurance.

The research found that SME business owners are now taking on loans that are on average £388,494 from £357,016 in Q3 2022 – an increase of close to 9%. This is a fall though on Q1 2022 when the average loan peaked at £644,672.

Working capital remains the top reason for new loans – 47% of applications were for this purpose, up from 37% in Q3 2022.  The main source of funding is unsecured loans – Purbeck saw more applications for PGI in respect of unsecured loans than at any time previously, in Q3 2023. Whilst the average property development SPV loan is now £484,860 compared to £362,694 in Q3 2022, an increase of circa 33.5%.  

Todd Davison, MD of Purbeck Personal Guarantee Insurance said “The rise in demand for insurance for personal guarantee backed loans points to a rise in confidence amongst SMEs after a noticeable dip in the Spring. It does suggest that small businesses applying for loans are adapting to the challenging economic environment and fortifying their cashflows, given the majority of loans are for working capital. While commercial mortgages have become less attractive to business owners, based on our data, unsecured loans have risen in popularity as an accessible alternative source of finance for those businesses that need it.”