Rise in personal guarantee backed loans among young UK businesses

New data from Purbeck Insurance Services reveals a sharp increase in the number and value of personal guarantee backed loans taken out by young businesses in the UK.

In the second quarter of 2025, 16% of small business loans supported through Purbeck’s Personal Guarantee Insurance (PGI) were issued to firms less than two years old. This represents a notable rise from 9% in the first quarter of 2025 and 6% in the same period last year.

The average loan size for these early-stage businesses has also grown significantly. In Q2 2025, the average loan reached £165,538, compared to £108,403 in Q2 2024 – a year-on-year increase of 52.71%.

Purbeck’s analysis suggests that more entrepreneurs are willing to take financial risks to grow their businesses, and lenders are increasingly open to supporting these ventures through personal guarantee backed funding.

The findings coincide with recent government initiatives aimed at strengthening support for UK entrepreneurs. These include the introduction of a mandatory Code of Conduct for accredited lenders using the British Business Bank’s Growth Guarantee Scheme (GGS), designed to ensure fair and transparent use of personal guarantees. The government has also committed to improving awareness of personal guarantee obligations among business owners.

Todd Davison, Managing Director of Purbeck Insurance Services, commented: “We’re seeing a clear shift in the lending landscape for start-ups.

“More start-ups are raising finance, and they’re doing so with confidence using personal guarantee insurance to mitigate the risk of PG backed loans. The fact that loan values are rising suggests entrepreneurs are both ambitious and attractive to lenders. This is encouraging and points to optimism and resilience in the UK start-up scene.”