SMEs more confident to take on finance in September

Small- and medium-sized enterprises (SMEs) are becoming more confident to take on new finance, research suggests.

The number of SME owners seeking personal guarantee insurance for a business loan doubled in September year-on-year, according to Purbeck Personal Guarantee Insurance.

The insurer’s third-quarter monitor also found that September saw the highest number of applications for personal guarantee insurance since March this year.

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Looking at the entire third quarter, applications rose by 32 per cent compared to the third quarter of 2022.

Working capital remains the most popular reason to take out a new loan, according to 47 per cent of applications. This was up from 37 per cent over the comparative period last year.

The average loan size in the third quarter was £388,494, a nine per cent increase from the previous year, with unsecured loans the main source of funding.

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“The rise in demand for insurance for personal guarantee backed loans points to a rise in confidence amongst SMEs after a noticeable dip in the Spring,” said Todd Davison, managing director of Purbeck Personal Guarantee Insurance.

“It does suggest that small businesses applying for loans are adapting to the challenging economic environment and fortifying their cashflows, given the majority of loans are for working capital. While commercial mortgages have become less attractive to business owners, based on our data, unsecured loans have risen in popularity as an accessible alternative source of finance for those businesses that need it.”

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