2 minute read • published in partnership with Purbeck Insurance Services
Insight: Analysis shows average personal guarantee in manufacturing reaches record level of over £213,000
The owners and directors of small and medium manufacturing firms are typically facing a personal guarantee demand from their lender of £213,396 – a record figure. This represents a 29% rise on Q1 2025, when the average personal guarantee demand was £164,964, according to the latest analysis of personal guarantee insurance applications for SME loans by Purbeck Insurance Services.
While the proportion of personal guarantee backed loans being taken for working capital to ‘keep the lights on’ amongst SMEs in the manufacturing sector fell marginally in Q2 2025 to 41% from 45% the previous quarter, this is still a high proportion compared with the rest of the market where typically 28% of loans taken by SMEs in Q2 2025 were for working capital.
However, 13% of loans in Q2 2025 were for stock purchase up from 9% in Q1 2025. This is the highest proportion recorded since Q4 2021. Furthermore, 28% were for the intention of development, growth initiatives and asset purchase.
Latest analysis by Purbeck Insurance Services shows owners and directors of small and medium manufacturing firms are typically facing a record personal guarantee demand from their lender of £213,396 / Picture: Getty/iStock
The unique analysis of personal guarantee insurance applications for business loans by Purbeck Insurance Services, reveals the growing personal risk many owners and directors of manufacturers are facing to secure funding for their business. The analysis comes as the Federation of Small Businesses highlights the impact personal guarantees are having on access to fundingii).
Todd Davison, managing director of Purbeck Insurance Services, said: “Our latest Personal Guarantee Insurance Monitor for Q2 2025 suggests a glimmer of improving confidence in manufacturing SMEs. But this comes with a higher level of borrowing and a record level of personal guarantee risk, commensurate to that borrowing. Purbeck Insurance Services, along with The Federation of Small Businesses, is concerned that many small firms are put off from borrowing due to a personal guarantee demand from a lender. Personal Guarantees needs to be appropriate and proportionate to the loan agreement.
“Ultimately, however, lenders have become more risk averse so personal guarantees have become a fact of life in business borrowing. It therefore remains vital that SME owners and directors in the manufacturing sector take steps to mitigate the risks of personal guarantee backed loans, whatever route they might take for finance – including the Growth Guarantee Scheme. Personal Guarantee Insurance exists to give businesses confidence to borrow but this is just one way to reduce the risk to a director’s assets. This underlines why owners and directors of manufacturers should always seek advice from an accountant, solicitor or commercial finance broker before signing on the dotted line.”
For more information on how Purbeck support SME manufacturers, visit: Purbeck Insurance Services