Start-ups and small businesses continue to struggle to access external funding, as a recent report shows a dramatic drop in loans offered to business owners.
Research conducted by Purbeck Personal Guarantee Insurance shows that the average start-up loan has fallen by over 138% in 2022, equating to just over £142,000.
By comparison, in 2021 the average start-up loan amount issued was £339,000.
Perhaps more stark is the fact that since 2019, the number of start-up loans issued in the UK was more than double today’s figures.
Declining Access to Working Capital for UK Small Businesses
These worrying statistics underline a wider trend troubling business owners, as opportunities to access finance for working capital continue to diminish.
Long gone are the days where small businesses could turn to banks for fast financial support when they need it the most. Small businesses often have inconsistent cash flow and require funding to plug short-term financial gaps in their budgets.
Nowadays however, traditional lenders require business owners to take on board significant personal risks – regardless of the company’s overall health – in order to qualify for financial support.
Today this poses a double-edged sword for small business owners in the UK. Not only has the size and availability of small business loans diminished but moreover, the personal guarantee amounts and liabilities demanded by lenders have markedly increased.
Purbeck’s research analysis highlights that personal guarantee commitments have hit an average of nearly £125,000; an impossible amount for thousands of business owners up and down the country.
It is reported that for many small businesses seeking loans from banks and traditional lenders, entrepreneurs are being asked to provide personal guarantees of approximately 87% of the total funding amount.
Small businesses access unsecured, fast funding from Got Capital. As an alternative lender, Got Capital offers financing solutions specifically designed for and catered to the needs of SMEs.
