Latest figures reveal working capital finance has nearly doubled in two years, while start-ups are securing larger average loans than established businesses for the first time in over a year.
New analysis from Purbeck Insurance Services, the UK’s only specialist provider of personal guarantee insurance for SME owners, points to continued strength in demand for business borrowing. Applications for personal guarantee-backed finance were up 63% in Q2 2026 compared with the same quarter last year. As directors continue to support borrowing with personal guarantees, the financial commitments involved are also increasing, with average loan values remaining above £300,000 for a second straight quarter at £317,000.
Highlights
- Applications for Personal Guarantee Insurance rose 63% year-on-year during Q2 2026
- Average loan value reached £317,000 for the second consecutive quarter above £300,000
- Average borrowing by start-ups climbed to £345,000, exceeding established businesses for the first time in more than a year
- Working capital accounted for 36.2% of all applications
- Working capital borrowing has nearly doubled over the past two years
- Growth investment represented 20% of borrowing activity despite continued economic uncertainty
- Asset purchases, development finance and acquisitions together made up almost one quarter of applications
Borrowing reflects both pressure and ambition
Working capital remained the leading reason SMEs sought personal guarantee-backed finance during Q2 2026, representing 36.2% of all applications. Demand for this type of lending has almost doubled over the last two years, highlighting the continued pressure on business cashflow. According to the ONS Business Insights and Conditions Survey, 40% of trading businesses experienced rising input costs in April 2026, the highest proportion recorded since December 2022.
The data also shows businesses continue to invest despite challenging trading conditions. Finance to support growth initiatives accounted for 20% of all applications, making it the second largest borrowing category. Lending for asset purchases, development projects and acquisitions together represented nearly one quarter of applications. This suggests many SME owners are managing immediate financial demands while continuing to invest in future opportunities.
