Personal guarantee insurance applications surge 62%

Applications for personal guarantee insurance (PGI) increased by 62% year-on-year in the third quarter of 2026, as UK business owners took on larger borrowing commitments backed by their personal assets, according to new data from Purbeck Personal Guarantee Insurance.

The figures show that applications rose 9% compared with the previous quarter, making Q3 2026 the second-busiest quarter recorded by Purbeck since 2021, behind only Q1 2026.

September was the busiest month on record, with applications increasing 69% compared with September 2025. Applications received during the first nine months of 2026 were already 22% higher than the total recorded throughout 2025.

The total value of business lending backed by personal guarantees in Purbeck’s data more than doubled year-on-year, reflecting both increased demand for finance and larger loan amounts.

The average loan supported by a personal guarantee rose 33% to £346,105, while the average level of insurance cover requested increased 27% to £194,274.

There was also a significant increase in applications for higher levels of protection, with the proportion seeking cover exceeding £450,000 rising from 5% in Q3 2025 to 13% in Q3 2026.

Working capital continued to account for the largest proportion of applications, representing 38% of the total, compared with 36% a year earlier.

Applications linked to working capital borrowing increased 68% year-on-year, highlighting the continuing demand for finance to support day-to-day business operations.

However, the strongest growth was recorded in borrowing for investment and expansion.

Applications associated with development finance increased 114%, while refinancing applications rose 109%. Borrowing for growth initiatives increased 98%, accounting for 18.5% of total applications.

In contrast, applications for stock and asset purchases increased by less than 10% year-on-year and declined significantly compared with Q2 2026.

Construction businesses accounted for 18.1% of all PGI applications, up from 13.8% a year earlier, following a 113% increase in applications from the sector.

The average level of cover requested by construction firms rose 31% to £232,993, with 46% of applications linked to working capital requirements.

Manufacturing applications increased 43% year-on-year, although they declined 7% compared with the previous quarter.

More than half (51%) of manufacturers seeking PGI were borrowing for working capital, compared with 39% in Q3 2025.

The data also revealed an increase in applications from female business owners, rising 86% year-on-year, compared with a 60% increase among men. Women accounted for 12.8% of total applicants, up from 11.2% a year earlier.

Established businesses continued to dominate demand, with companies trading for more than two years accounting for 85% of applications. However, applications from businesses operating for less than two years increased 45%, while their average loan size rose 55%.

“More business owners are borrowing, and they are borrowing more. The total value of lending backed by the personal guarantees in our data has more than doubled in a year. That is a lot of family homes and savings standing behind business plans.

“The positive news is that applications for development finance have more than doubled, borrowing to invest in growth has almost doubled and we’re seeing more female business owners seeking out PGI to protect business loans.

“But working capital is still the biggest single reason for borrowing, and in sectors such as construction and manufacturing it accounts for around half of applications.”

Under a personal guarantee, business owners can become personally liable for business borrowing if their company becomes insolvent and cannot repay the debt, potentially putting personal assets, including property and savings, at risk.

Davison urged company directors to understand their potential liabilities before entering into borrowing agreements.

“A personal guarantee is hard to avoid in business lending. Before signing, directors should understand exactly what they could be liable for, take independent advice, and think about how they would protect themselves and their family if the business ran into trouble.

“Personal Guarantee Insurance provides protection for up to 80% of the loan, and as our data shows, more and more business owners are seeking out this cover to borrow with greater confidence.”