Working capital borrowing has almost doubled in two years, while average borrowing by start-ups has overtaken that of established businesses for the first time in more than 12 months.
Businesses across the UK are continuing to rely on external finance as economic pressures persist, according to new figures from Purbeck Insurance Services, the UK’s only provider of personal guarantee insurance for SME owners. During Q2 2026, applications linked to personal guarantee-backed borrowing increased by 63% compared with a year earlier. The data also highlights growing personal financial exposure for business owners, with the average loan value standing at £317,000 for the second quarter in a row.
Highlights
- Personal Guarantee Insurance applications increased 63% year-on-year in Q2 2026
- Average borrowing reached £317,000, remaining above £300,000 for two consecutive quarters
- Start-ups recorded average borrowing of £345,000, overtaking established businesses for the first time in over a year
- Working capital made up 36.2% of all applications
- Demand for working capital finance has almost doubled over the last two years
- One in five applications supported business growth initiatives
- Asset purchases, development and acquisitions collectively represented almost 25% of borrowing
Cashflow remains under pressure
Working capital continues to account for the largest share of personal guarantee-backed lending, making up 36.2% of applications during Q2 2026. Demand for this type of finance has increased significantly over the past two years, reflecting the cashflow challenges many SMEs continue to experience. The latest ONS Business Insights and Conditions Survey found that 40% of trading businesses reported increased input costs in April 2026, the highest proportion since December 2022.
Despite these pressures, many businesses are continuing to invest in their future. Borrowing for growth projects represented 20% of applications, making it the second most common reason for seeking finance. Funding for asset purchases, business development and acquisitions also remained strong, accounting for almost one in four applications. The figures indicate that SMEs are balancing immediate financial needs with plans for long-term expansion.
