Start-up lending surge led by personal guarantee insurance

New data from Purbeck Insurance Services suggests an inflection point in the UK start-up finance market, with a marked increase in young businesses taking on personal guarantee backed loans to secure funding. The rise comes alongside increased awareness of insurance products designed to mitigate risk for business owners.

In the second quarter of 2025, 16% of loans backed through Purbeck’s Personal Guarantee Insurance (PGI) were for businesses less than two years old — a steep increase from 9% in Q1 and just 6% in the same period last year. The average loan value also climbed to £165,538, up 52.7% from £108,403 in Q2 2024.

Todd Davison, Managing Director of Purbeck Insurance Services, said: “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.”

The figures come at a time when government support for entrepreneurship is expanding. In recent months, the UK Government has introduced new measures under the British Business Bank’s Growth Guarantee Scheme (GGS), including a mandatory Code of Conduct for accredited lenders. The initiative is intended to ensure personal guarantees are used transparently and that business owners better understand their implications.

Purbeck’s analysis indicates that this regulatory shift may be contributing to increased trust in personal guarantee products, which are often required when traditional collateral is unavailable. The business believes greater access to insurance protection is helping de-risk personal liability for founders — an essential move at a time when venture capital remains difficult to access for early-stage companies.

“At Purbeck Insurance Services, we’re proud to play a role in supporting these businesses by offering protection that helps founders access finance they need with greater peace of mind,” Davison added. “We welcome the commitment by UK Government to improve awareness of personal guarantee risks and to help ensure PG demands are fair and proportionate.”

Purbeck, which is regulated by the Financial Conduct Authority and underwrites policies as a Managing General Agent for Markel International, continues to specialise in personal guarantee insurance — a form of annual cover that insulates directors from the financial risk of loan default when guarantees are called in.

For many early-stage businesses, the use of PG-backed loans is seen as an alternative to equity dilution. As access to traditional business loans and grants remains tight, especially for pre-profit ventures, insured guarantees are increasingly viewed as a viable path to scaling.