Purbeck Insurance Services’ Personal Guarantee Insurance Monitor, Q2 2025 shows UK SMEs are shifting from survival borrowing toward growth investment. Key trends include:
- Working capital loans backed by personal guarantees fell 24% from Q1 2025
- Refinancing deals jumped 53.6% year-on-year, reflecting renewed lending momentum
- Growth investment applications rose 38%, with asset-purchase finance up 9.7%
- Average personal guarantee demand climbed to £194,499, edging toward £200k
Working Capital vs. Growth Financing
In Q2, fewer SMEs required loans “to keep the lights on,” marking the lowest level of working-capital borrowing since Q3 2024. At the same time, refinancing volumes surged as banks, challengers, fintechs, and government schemes re-engaged the market. Although volumes remain below pre-pandemic highs, the increase signals improving access to credit.
Rising Loan Sizes and Personal Guarantee Risk
As SMEs pursue expansion, the average loan size rose, pushing the typical personal guarantee demand from £182,804 in Q1 to £194,499 in Q2—a 6.4% increase. To manage this growing personal liability, applications for Personal Guarantee Insurance (PGI) climbed 3.2% year-on-year, with June 2025 posting a record 17.8% rise over June 2024.
“Our latest Personal Guarantee Insurance Monitor for Q2 2025 suggests a growing level of confidence in UK SMEs, echoing the findings of the latest Lloyds Bank Business Barometer. SMEs are shopping around for better finance deals and pursuing their growth ambitions. But this comes at a cost with a higher level of borrowing and a higher level of personal guarantee risk, commensurate to that borrowing. With business insolvencies rising it is vital SME owners and directors take steps to mitigate the risks of personal guarantee backed loans, whatever route they might take for finance – including the Growth Guarantee Scheme.”
— Todd Davison, Managing Director, Purbeck Insurance Services
Unsecured Lending on the Rise
Unsecured loans accounted for 45% of Q2 financing, making them the most popular structure, followed by secured facilities at 16%. This mix suggests many SMEs prefer to avoid putting business assets at risk, even as they accept higher personal guarantees.
