SMEs boost working capital ahead of Budget
As The British Business Bank launches Business Finance Week, for small businesses, new data on loans to small and medium sized enterprises shows record levels of funding being secured and a strong demand for personal guarantee insurance (PGI) protection for business owners who have put their own assets on the line for a loan.
The data from Purbeck Insurance Services, the UK’s only provider of personal guarantee insurance shows the average loan secured has risen to £289,827 from £204,035 in Q3 2024 – a 42% increase. In young businesses the average loan has risen to £155,257 – the highest value recorded to date and a huge 64% jump on £94,265 in Q3 2024.
To support this activity, PGI applications in September 2025 were at a record level, and up 16% over the course of Q3 2025. This suggests business owners are becoming shrewder about the risks of personal guarantees and more aware that they are difficult to avoid when taking finance. They are therefore taking steps to cut their personal risk.
As businesses face increased costs and more uncertainty with the upcoming Budget, 36% of loan applications in Q3 2025 were for ‘Working Capital’ to sustain cashflow, bringing the proportion of loans for this purpose back up to levels last seen in Q3 2024.
However, while small and medium sized businesses are borrowing more they are securing a lower level of insurance protection for personal guarantees – this has dropped back to £168,913, from £194,786 in Q2 and is now at the lowest level since Q1 2024.
Todd Davison, MD of Purbeck Insurance Services said: “The record demand we’ve seen for Personal Guarantee Insurance reflects a clear shift in the way business owners are approaching risk to support the strongest appetite for funding that we have ever seen. By removing the personal guarantee risk, business owners can focus on running their business and maximising the cash injection they have secured.
“The sharp rise in loan values, particularly among younger businesses, highlights the vital role that funding plays in keeping firms resilient and able to grow in the face of rising costs and continued uncertainty. However, it is concerning to see that while borrowing is rising, the level of personal guarantee insurance protection taken is falling. At a time when personal liabilities are potentially greater than ever, PGI is a crucial safety net for business owners and their families.”