The SME Finance Taskforce’s recent “Smart Data to Unlock SME Lending” report has been welcomed by Todd Davison, Managing Director of Purbeck Personal Guarantee Insurance. He praised the proposed actions to improve credit access for businesses but pointed out a significant omission: the issue of personal guarantees.
Earlier this week, the SME Finance Taskforce, which includes leading banks, alternative lenders, fintech companies, accountancy software providers, payment schemes, credit reference agencies, and industry bodies, unveiled a plan aimed at revitalising the UK economy.
Go deeper with GlobalData
This initiative is expected to enhance lending and financial access for the country’s 5.5 million SMEs. These businesses are crucial to the economy, employing 60% of the private-sector workforce and generating over 50% of the nation’s economic turnover.
Davison highlighted a key finding from the report: around 250,000 SMEs have sought bank loans or private lending over the past three years, according to a British Business Bank survey. Many of these businesses encountered requests for personal guarantees, causing some to abandon their loan applications.
Purbeck’s research indicates that 60% of small business owners lack confidence in handling the risks associated with personal guarantees, and 13% have withdrawn from loan negotiations due to these demands, hindering their ability to secure necessary financing.
The Financial Conduct Authority (FCA) is currently investigating the use of personal guarantees in small business lending. Davison emphasised the importance of this investigation and the need for business owners to understand the risks and mitigation strategies, such as sharing guarantees with co-directors or using personal guarantee insurance. He urged the SME Finance Taskforce to raise awareness about personal guarantees to prevent them from becoming a barrier to growth and innovation.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe SME Finance Taskforce is chaired by the Centre for Finance, Innovation & Technology (CFIT) with support from an Open Banking Limited (OBL) secretariat.
SME Finance Taskforce unveils 7-point plan to boost UK economy
The role of personal guarantees in the SME lending space
