Purbeck Personal Guarantee Insurance Monitor Q1 2025
Key Facts:
- Applications for personal guarantee insurance (PGI) to protect business loans up 9% Q1 2025 vs Q1 2024
- 50% year on year surge in SME loan applications for business acquisitions
- Loans for working capital to keep a business afloat fall 6% year on year
- But working capital is still the top reason SMEs apply for loans (32% of all loans)
- Businesses are securing bigger loans with bigger personal guarantees - up 16% year on year as SMEs take advantage of the increased level of cover available to them
April 2025: Despite an uncertain economy, applications for Personal Guarantee backed business loans rose by 9% year-on-year in the first quarter of 2025. This is according to the Q1 2025 Personal Guarantee Insurance (PGI) Monitor from Purbeck Personal Guarantee Insurance, the UK’s only provider of PGI to SMEs. The 9% rise suggests that the appetite for finance remains strong, despite or perhaps because of the rising costs of running a business.
Meanwhile as the National Insurance Contribution (NIC) changes come into effect this month, it was interesting to note that the volume of loans taken out for working capital, to keep a business running, actually fell by 6% year on year. However, loans for this reason still make up almost a third (32%) of all personal guarantee backed loans taken out by SMEs, demonstrating that many SMEs are looking for funds to maintain their business, build resilience and stay afloat.
Tax change shift drives demand for business acquisition loans
Reflecting the changing tax regime, Q1 2025 also witnessed a marked 50% increase in applications for SME loans needed for business acquisitions. This was likely driven in part by the desire to get transactions completed ahead of the April 6th Capital Gains Tax (CGT) and Business Asset Disposal Relief rises. With many deals now completed in advance of tax changes, it will be interesting to see if this leads to a slower demand for business acquisition loans over the next quarter.
In a further sign of SME resilience, Q1 2024 also saw a 17% increase year on year for loans to invest in growth, meanwhile funding for Business Development has also risen over the same quarter, with an 11% increase in loans for this reason.
Average value of Personal Guarantee Insurance backed loans soars
A fragile global economy hasn’t deterred entrepreneurial business owners from investing more heavily in their firms. Purbeck saw the average personal guarantee for a loan rise 16% to £182,770 in Q1 2025 compared to £157,285 in the same period last year. Digging deeper into the data, the number of personal guarantee backed loans valued at £300,000 has doubled year on year following an increase in the insured limits offered by Purbeck Personal Guarantee Insurance.
Todd Davison, MD of Purbeck Insurance Services said, “Our data shows that SMEs are borrowing more than they were this time last year but they are borrowing responsibly. They are using insurance to cut the risk of signing a personal guarantee so that they can access the funds they need to grow, invest, or manage cash flow healthily. Whether SMEs are borrowing for acquisitions and growth, or are securing finance simply to stay afloat, the current economic unpredictability makes it more important than ever to mitigate risk. That’s where insurance plays a vital role, helping to protect business owners from the personal liabilities associated with personal guarantee-backed loans.”
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