A higher number of small businesses sought finance for growth initiatives in the second quarter of 2024 than at any point in the last three years, according to the latest analysis by Purbeck Insurance Services – the UK’s sole provider of personal guarantee insurance for small business loans.
In Q2, 19% of small business owners who secured personal guarantee-backed loans did so to invest in growth initiatives, while the proportion of loans taken out for working capital dropped to 31%. Although working capital remains the primary reason for securing finance and applying for Personal Guarantee Insurance, this is the lowest level since Q3 2022, following a peak of 37% in Q1 2024.
Key Findings:
· Appetite for finance for growth on the up – 19% of applications were for investment in growth initiatives – the highest level recorded since Purbeck started collecting this data in Q1 2021
· General Election effect makes June the second highest month on record for applications for personal guarantee insurance from small business owners/directors
· Big year on year rise in demand for small business finance – there has been a 69% increase in applications for Personal Guarantee Insurance for a Small Business Loan Q2 2024 vs Q2 2023
· The average cover for a personal guarantee reaches £195,051 – a 33% rise compared to the same quarter in 2023.
· In construction, the average cover for a personal guarantee rose to £230,910. This is the highest level recorded to date.
· 40% of applications for personal guarantee insurance were for unsecured loans while 16% have been for secured loans.
· Just 8% of loans are Asset Finance and the number invoice finance loans have fallen to just 5% of applications – the lowest level recorded to date.
Todd Davison, MD of Purbeck Insurance Services says: “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 does suggest a turnaround in confidence in the small business community, after a tough few years.
“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.”
