PGI Knowledge Centre

• • -> Personal Guarantee Backed Loan Applications by Small Builders/Contractors up 58%
  • -> Loans for ‘working capital’ up 78%
  • -> Average loan value falls by £23,000
    
    

• • Applications for Personal Guarantee Insurance to support business funding rose 50.5% Q1 2022 vs Q1 2021
    In March 2022, the number of applications doubled those received in March 2021. 
    • 35% of finance applications with a personal guarantee attached are for ‘Working Capital’
    • Applications for personal guarantee insurance to support funding for ‘Working Capital’ up 88% vs Q1 2021
    • The average loan rises 22%, from £142,718 in Q1 2021 to £174,104 Q1 2022
    • Finance applications for business development up 69%

We all know that in order to make money, you need to spend money, which is why many SME directors choose to take out loans to help their businesses grow, or when starting on a new venture.

April 2022: Following a report in the Financial Times this week suggesting that(i) a permanent replacement for the loan schemes offered to small and medium sized businesses during the pandemic is in the pipeline, we have welcomed the move but urge caution over personal guarantee requirements which could prove a barrier to take up.

As a business owner, you’ve got to be comfortable with an element of risk. Not only are you risking your own money, but if you take out credit, you’re risking somebody else’s too.

Starting a business is one thing but keeping it going often needs extra cash and while there is a good choice of funding options to consider, as a start-up it is unlikely you will have security in the business to offer the lender. This means you may need to sign a personal guarantee.

March 2022: Ahead of the Chancellor’s Spring Statement on 23rd March 2022, we're urging Rishi Sunak to consider key measures to support small businesses following news that company insolvencies doubled in February^[i].
 

People with Personal Guarantee Insurance Double Year on Year

• Men are more likely than women to want to start their own business – 57% of male respondents compared to 43% of female
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• People in London and the South East are most likely to be budding entrepreneurs
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• Those between 25 and 34 are the keenest to become their own boss (66%), followed by those aged 18-24 (55%) but 41% of the over 55s surveyed also have ambitions to start their own enterprise

The latest data shows that three in four of all small and medium size businesses in the UK are carrying some form of corporate debt, with an average borrowing of £200,000.