Fresh figures show working capital borrowing has nearly doubled over the past two years, while start-ups are now taking out larger loans than established firms for the first time in more than a year.
New research from Purbeck Insurance Services, the UK’s only provider of personal guarantee insurance for SME owners, shows a sharp increase in demand for business finance during Q2 2026. Applications for personal guarantee-backed lending rose by 63% compared with the same period last year, highlighting the continued need for funding among SMEs. As every application involves a director providing a personal guarantee, the level of personal financial commitment is also increasing. Purbeck’s latest data shows the average loan value reached £317,000, remaining above £300,000 for a second consecutive quarter.
Highlights
- 63% year-on-year increase in Personal Guarantee Insurance applications in Q2 2026
- Average loan value reached £317,000, staying above £300,000 for the second consecutive quarter
- Start-ups are now borrowing more than established businesses, with average loans of £345,000 for the first time in over a year
- Working capital represents 36.2% of all borrowing, equating to more than one in three applications
- Working capital borrowing has almost doubled over the past two years
- Growth investment accounts for 20% of all applications despite ongoing economic challenges
- Asset purchases, development and acquisitions make up almost one quarter of applications
Working capital remains the biggest borrowing priority
Working capital continues to be the main reason SMEs seek personal guarantee-backed finance, representing 36.2% of all applications in Q2 2026. Demand for this type of borrowing has nearly doubled over the last two years, underlining the pressure many businesses face in managing day-to-day cashflow. According to the ONS Business Insights and Conditions Survey, 40% of trading businesses reported higher input costs in April 2026, the highest level recorded since December 2022.
At the same time, businesses are not focusing solely on immediate financial pressures. Borrowing to support business growth accounted for 20% of applications, making it the second most common reason for seeking finance. Funding for asset purchases, development projects and acquisitions together represented almost one in four applications. This demonstrates that many SME owners continue to invest for the future while managing today’s financial challenges.
