In a sign of improved confidence in the manufacturing sector, the latest data on personal guarantee-backed business loans to smaller manufacturers shows a dramatic rise in applications for finance for the third quarter of 2024.
Purbeck Personal Guarantee Insurance saw a 161% year-on-year increase in applications for personal guarantee-backed business loans by the directors and owners of manufacturing businesses. Personal guarantee-backed loans require the business owner to put their personal assets (such as their home and savings) on the line as security for the loan.
While an increase in loan applications suggest higher levels of confidence, Purbeck’s data shows that 48% of applications for personal guarantee-backed loans in the third quarter of 2024 were for working capital, to keep the business running. This is up from 34% in the second quarter of 2024. 15% of loan applications were for business acquisitions and a further 15% were for asset purchase.
Manufacturing firms are also being prudent about the amount they are borrowing. The data from Purbeck Personal Guarantee Insurance shows the average size of loan and corresponding personal guarantee demand was £167,865 — a marginal increase on the same quarter in 2023 (£166,030).
Todd Davison, managing director of Purbeck Insurance Services, concluded: “Our analysis echos the cautious optimism expressed in the
Manufacturing Outlook for the third quarter of 2024, published by Make UK. We would hope that once manufacturers feel more confident about the outcome of the Budget and the impact of rising energy costs, they will have renewed confidence to invest and grow.”