

Posted by Todd Davison on
Applications for Personal Guarantee Insurance Down 13%
July 2023: The barriers SMEs face in accessing finance have become clear in the latest data on personal guarantee insurance (PGI) applications for business loans. The Purbeck Personal Guarantee Insurance Monitor for Q2 2023 has recorded the first recorded fall in the volume of applications for insurance for personal guarantee backed loans by small and medium sized business owners. This is since data collection began in Q1 2021.
In Q2 2023 compared to Q1 2023, there were 13% fewer applications after two years of consistent rises each quarter in the volume of applications being received by Purbeck Personal Guarantee Insurance.
The data also suggests business acquisition activity in the SME community has fallen in the latest quarter – just 5% of applications for PGI for a business loan was for this purpose compared to 13% in Q1 2023.
However, year on year the volume of applications has increased by 55%. This demonstrates how access to funding has become increasingly reliant on a director/owner of a business, signing a personal guarantee.
Key facts:
The findings have been published as a cross-party Committee of MPswill examine the key challenges SMEs face when seeking finance, the regulation of small business lending, and the role the government can play in enhancing lending to small businesses.
Todd Davison, our MD said: “It’s no coincidence that a quarterly fall in the volume of applications for personal guarantee insurance for loans comes as MPs look into the issue of access to finance for SMEs. As interest rates continue to rise, the decision to take on a loan becomes all the more precarious, especially when a personal guarantee is demanded as security. Let’s not forget, security may often be the business owner’s home and there is a great deal of uncertainty around home values and mortgage payments which will be creating increased caution."
“We strongly support any moves to improve lending to small businesses. Personal Guarantee Insurance exists to give business owners confidence to take on business loans without putting their personal assets at risk. It is an example of innovation in small business finance that the cross-party Committee will want to explore along with options to improve the affordability of loan repayments.”
For more information or to speak to one of our underwriters contact us today.