Post-COVID UK Lending Trends Reshape SME Landscape with Rising Personal Guarantees

Personal guarantees are becoming the norm for UK SME loans. As the government recognizes the issue, businesses must protect themselves to ensure growth.

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2025 November 5 . 5:02 PM

1 min read

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Post-COVID UK Lending Trends Reshape SME Landscape with Rising Personal Guarantees

Post-COVID lending trends in the UK are reshaping the financial landscape for small and medium enterprises (SMEs). Personal guarantees, once a niche requirement, have become more prevalent and significant, with 1 in 3 SME loans now backed by such guarantees.

The average personal guarantee-backed loan has surged by 16% year-on-year to nearly £180,000. This increase, coupled with a 52% rise in average loan value for young businesses under two years old (now £165k), highlights the deepening reliance on personal guarantees.

Purbeck Insurance Services has witnessed a record demand for Personal Guarantee Insurance (PGI), reflecting the growing concern among SME owners to protect their personal assets. With 5.5 million SMEs employing 16.6 million people and generating £2.8 trillion in turnover, the impact of harsh personal guarantee requirements is far-reaching. These requirements are increasingly stifling growth ambitions, with 36% of loans used for working capital to keep businesses afloat.

The UK Government has pledged to help businesses better understand personal guarantees, indicating a recognition of the issue's gravity. As lending patterns continue to evolve post-COVID, it is crucial for SMEs to be informed and protected, ensuring personal guarantees do not hinder their growth and survival.