Applications for Personal Guarantee Backed Finance rose 82% in 2024 as SME manufacturers sought to sustain their businesses

The sharp rise in applications comes as manufacturers continue to navigate challenging economic conditions in advance of increased employment costs, following the Chancellor’s National Insurance Contribution (NIC) increase and rise in the national living wage which come into effect in April. 

Personal guarantee backed loans allow the owner/director of a business to put their personal assets up as security for a loan, using insurance to mitigate that risk. The surge in demand for these loans underscores the crucial lifeline they provide to the SME manufacturing community as they continue to manage cashflow challenges, while seeking to grow their businesses.

1 in 3 need funds to maintain businesses

With financial pressures continuing to mount, over a third (37%) of SME manufacturing firms seeking finance required the cash injection to cover working capital needs, including providing the necessary liquidity to cover running costs, paying suppliers and employees. The increase in demand for loans comes as the S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) fell to an 11 month low and a deep downturn in manufacturing output was reported amongst SMEs.

Investment in growth initiatives remain

Despite economic uncertainty, however, and highlighting the manufacturing sector’s resilience and ambition, investment in growth initiatives are still being made. 15% of personal guarantee backed loans were sought for this purpose in 2024, as manufacturers position themselves for future success in an evolving market. 

"The number of loans being taken for working capital demonstrates the enormous pressure on small to medium sized manufacturing firms. Of course, increased economic pressures following the last budget will not help, but it is also encouraging to see renewed optimism in the sector following the publication of the new Industrial Strategy, which 57% of UK manufacturing executives believe will increase investment going forward," said Todd Davison, MD of Purbeck Personal Guarantee Insurance.

“There’s no doubt the road remains rocky but with the help of finance initiatives, whether traditional sources like banks, or alternative funding like UK Export Finance (UKEF) guarantees, SME manufacturers will be able to navigate a path through. Meanwhile, it is reassuring to see that their growing reliance on personal guarantee insurance underlines the fact that manufacturers are taking steps to increase their financial resilience. By leveraging insurance solutions, business owners are taking proactive measures to safeguard their personal assets while accessing much-needed finance for growth and operational stability.”

www.purbeckinsurance.co.uk