2 min read • published in partnership with Purbeck Insurance Services
Manufacturers put more money into new machinery in Q3 2025 but cashflow remains king amid rising costs
New data on personal guarantee backed loans taken by small and medium manufacturers suggests a shift in confidence and strategy by the sector, with increased investment in assets such as new machinery and equipment.
In Q3 2025, 20% of personal guarantee backed loans were secured for asset purchase compared to just 6% in Q2 2025. The data, from Purbeck Insurance Services, the UK’s only provider of personal guarantee insurance to business owners and directors, suggests a level of confidence to invest that has not been seen since Q4 2022, when 22% of personal guarantee backed loans were for asset purchases.
Funding for working capital remains the main reason for loan applications, with 39% of loans for this reason, but in another possible sign of improved confidence, this is a slight fall on Q2 2025, when 41% of loans were simply to keep a business afloat.
Furthermore, showing that manufacturing is one of the most active sectors for growth and M&A activity, 13% of loans were for growth initiatives and 16% for acquisitions.
New analysis shows SME manufacturers put more money into new machinery in Q3. The data from Purbeck Insurance Services also suggests a level of confidence to invest that has not been seen since Q4 2022 / Picture: Getty/iStock
Growth and investment are being pursued with caution, however. The average loan has fallen from £213,396 in Q2 to £163,716 in Q3 2025, a difference of £49,680 and a fall of over 30% in one quarter. Manufacturers have faced increased labour costs and further costs to come through the Employment Rights Bill so many will be anxious not to over indebt themselves.
Todd Davison, MD of Purbeck Insurance Services, said: “Manufacturers are beginning to look beyond survival, and that’s a welcome signal. The rise in asset purchases tells us that many firms are investing in newer, more efficient machinery to stay competitive. But this confidence is measured — loan values are down, and cashflow is still the number one priority which is not surprising given the rise in labour costs.
“It’s a sector ready to grow, but not at any price. Business owners are committing to progress while protecting themselves against risk through personal guarantee insurance. That blend of ambition and caution is what will define manufacturing resilience through the remainder of 2025.”
For more information on how Purbeck support SME manufacturers, visit: Purbeck Insurance Services