New data reveals working capital loans have almost doubled in two years and for the first time in over a year, start-ups are borrowing more than established businesses
New data from Purbeck Insurance Services, the UK’s only provider of personal guarantee insurance for SME owners, reveals that applications for personal guarantee-backed finance rose 63% year-on-year in Q2 2026, reflecting sustained and growing demand for borrowing among small and medium-sized businesses. Behind every loan application is a director who has personally guaranteed a business loan and the scale of that exposure is growing as Purbeck’s data shows the average loan value exceeded £300,000 for the second consecutive quarter.
Highlights
- 63% year-on-year rise in Personal Guarantee Insurance applications in Q2 2026
- Average loan value £317,000 — above £300,000 for the second consecutive quarter
- Start-ups now borrowing more than established businesses — average start-up loan reaches £345,000, the first time in a year
- Working capital accounts for 36.2% of all borrowing — more than one in three applications
- Working capital loans have almost doubled in two years
- Growth-focused borrowing makes up 20% of all applications despite economic headwinds
- Asset purchase, development and acquisition together account for nearly one in four applications
Working capital crisis driving borrowing surge
Working capital — the day-to-day funding needed to keep a business trading — remains the single biggest driver of personal guarantee-backed borrowing, accounting for 36.2% of all Q2 2026 applications and the volume of working capital loans has almost doubled in just two years. The trend points directly to the cashflow pressure bearing down on UK SMEs: 40% of trading businesses reported rising input costs in April 2026 — the highest proportion since December 2022, according to the ONS Business Insights and Conditions Survey.
The picture is not, however, one of businesses simply firefighting. Finance for investment in growth initiatives accounted for 20% of all applications — the second most common reason for borrowing. Businesses are also seeking finance for asset purchase, development and acquisition, which together account for nearly one in four of all applications. The breadth of borrowing purposes suggests that SME owners are balancing short-term cashflow pressures with continued longer-term investment, even in a difficult environment.
ENDS
