Rising Trends in Personal Guarantee Insurance Among Small Business Owners
Borrowing plays a crucial role in helping small businesses expand, refinance, or manage daily operational costs. However, when lenders require directors to sign personal guarantees, the financial commitment extends beyond the business, potentially placing the director’s personal assets at risk. Recent data from Purbeck Personal Guarantee Insurance reveals a significant increase not only in the number of business owners taking on personal guarantees but also in the size of the loans involved.
Record-Breaking Application Levels
Applications for personal guarantee insurance saw a remarkable 62% year-on-year increase in the third quarter of 2026, with a 9% rise compared to the previous quarter. September 2026 marked Purbeck’s busiest month ever, with applications soaring 69% higher than in September 2025. By the end of that month, the total number of applications in 2026 had already surpassed the full-year total for 2025 by 22%, according to Purbeck’s quarterly report.
Increasing Loan Amounts Backed by Personal Guarantees
The size of loans secured by personal guarantees is growing alongside demand. The average loan amount increased by 33% year on year, reaching £346,105. Correspondingly, the average insurance cover requested rose 27% to £194,274. Notably, applications requesting cover above £450,000 represented 13% of the third-quarter total, up from just 5% the previous year. Purbeck’s data indicates that the overall value of lending supported by personal guarantees more than doubled over the course of the year.
Purposes Behind Borrowing
Working capital remains the primary reason for borrowing, accounting for 38% of all applications. Applications associated with working-capital loans jumped 68% year on year. Additional borrowing purposes also saw substantial growth: development finance applications climbed 114%, refinancing loans rose 109%, and borrowing for growth initiatives increased by 98%. These figures highlight the diverse financial needs driving business owners to seek personal guarantees.
Sector and Gender Insights
The borrowing landscape varies across industries. Construction businesses experienced a 113% increase in applications, with 46% of those loans earmarked for working capital. In the manufacturing sector, 51% of applicants sought working capital loans, up from 39% the previous year. It’s important to note these numbers reflect Purbeck’s applicant data, not the entirety of UK business borrowing.
There has also been a notable shift in the demographics of applicants. Applications from women rose 86% year on year, outpacing the 60% increase among men. Women now represent 12.8% of all applicants, compared with 11.2% in the same quarter of 2025.
“More business owners are borrowing, and they are borrowing more,” says Todd Davison, Purbeck’s managing director. “That is a lot of family homes and savings standing behind business plans.”
Key Considerations for Directors Before Signing Personal Guarantees
Signing a personal guarantee can expose a director’s personal assets if the business fails to repay its debts. Directors should carefully consider the extent of their liability, including the total amount guaranteed and whether they could be held responsible for the full debt alongside other guarantors. Understanding the mechanisms for releasing a guarantee is equally important. The UK government provides comprehensive guidance on personal guarantees, available here.
Whether the loan supports growth plans or immediate cash flow needs, the critical question remains the same: what would the director personally owe if the business could not meet its obligations?
For further insights and detailed figures on this growing trend, visit Here.
