PGI Knowledge Centre

• Uncertainties about the economic outlook in 2019, including those related to Brexit, meant UK businesses deferred spending and investment until they had more clarity about the future trading environment. Will firms see more cause for optimism in 2020?

Are you one of the millions of small business owners who have secured a loan by signing a personal guarantee without realising the implications?

• Purbeck Insurance Services fully supports the new bill to clampdown on late payment in the construction sector which has such a negative impact on subcontractors in this market. Our own survey of the market has shown that 35% of small businesses in the construction sector find managing late payment the hardest thing about running their firm.

• Burnout beckons for female small business leaders – 46% never switch off compared to 38% of male leaders

• - Bosses aged 35-44 in Property Development, Construction and Legal Services least able to switch off from work
• - East Midlands is worst for ‘switching off, Scotland is best
• - Employers of 10-49 people have most difficulty switching off

• Technology will continue to drive innovation in small business finance. The days of making an appointment with the bank manager is becoming a thing of the past.  Technology is making the process more streamlined, speeding lending decisions and access to finance for small businesses. In 2020, Open Banking and the ability to draw information from accounting software will give lenders and financial intermediaries a wealth of information that will enable them to provide focused credit solutions.
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• Peer to peer business lending will continue to grow in 2020. P2P lenders will play a valuable role in providing access to credit for small businesses – particularly those who have not been able to access high street bank funding.  This will fill the funding gaps for underserved businesses and will help underpin many new start-ups in the year ahead.
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• New rules concerning who gets paid in what order in an insolvency could also support growth in Peer to Peer lending. In April 2020, HMRC will become a preferred creditor in a business insolvency for certain HMRC debts[i]. These changes will encourage traditional lenders to consider their risk exposures.  This may lead to a tightening of credit and/or credit at more expensive interest rates due to the preference of HMRC over floating asset and unsecured creditor positions.
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• There will be a continued reliance on financial intermediaries such as accountants and finance brokers in 2020 as small businesses seek expert support to determine their best finance options. There will be a particular demand from those businesses who have not been able to secure finance from high street banks.
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• Collaboration between banks, alternative finance providers and policymakers will ramp up to ensure that businesses have access to critical funding lines, particularly if the UK leaves the EU without a deal.
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Following news that business birth rates have fallen[i], Purbeck, the provider of the UK’s only personal guarantee insurance solution for the owners and directors of UK SMEs, is urging small businesses to build their financial resilience for 2020 to help maximise opportunities to grow.  In a survey by Purbeck, 70%[ii] of small business owners said Brexit uncertainty had made their business harder over the past year and the burden of managing cashflow is one of top five hardest things about running a business. 

At the same time, lenders are demanding more security from business owners and directors for new finance deals – in a recent survey of finance brokers by Purbeck, 49%[iii] reported an increase in demand for personal guarantees in the past year.

Survey reveals demand for personal guarantees from lenders rises by nearly 50% in past twelve months

Lenders are increasingly asking SMEs for personal guarantees to secure business finance a survey[i] has revealed. The survey of commercial finance brokers undertaken by Purbeck, the UK’s only personal guarantee insurance solution for the owners and directors of UK SMEs, found 47% of respondents said they had seen a rise in demand for personal guarantees as part of a new business finance package, in the past year.

A survey of commercial finance brokers[i] undertaken by Purbeck, the UK’s only personal guarantee insurance solution for the owners and directors of UK SMEs, has uncovered an increasing demand by lenders for personal guarantees to secure business  finance.  

In the survey, 47% of brokers said they had seen a rise in demand for personal guarantees as part of a new business finance package, in the past year.  This is further evidenced by the fact that Purbeck saw a 173% year on year increase in demand for personal guarantee insurance in October 2019, with a record peak that month in new policies underwritten.

Now more than any time since the last recession, small businesses need the confidence to borrow

Purbeck Insurance Services, provider of the UK’s only Personal Guarantee Insurance solution for the owners and directors of small businesses has welcomed the suggestion made by Andrew Bailey, CEO, Financial Conduct Authority in a recent report, to bring regulation into small business lending.

Finance warning to UK’s small business owners as Brexit uncertainty continues

• - 70% of small business owners say Brexit uncertainty has made business harder
• - Long hours and pressure on family life some of the hardest aspects of running your own business
• - Small business owners cautioned on taking loans that will put personal finances at risk – 43% arrange funding without seeking independent advice