Small companies are borrowing more cash, with one insurance coverage agency reporting a pointy progress in functions.
Purbeck Insurance coverage Companies, a UK private assure insurance coverage agency for SME homeowners, noticed a 63% rise in small enterprise borrowing for private guarantee-backed finance in Q2, 2026.
Firm knowledge reveals the common mortgage worth exceeded £300,000 for the second consecutive quarter.
Working capital loans have been hottest. Referred to as the each day funding required to maintain a agency buying and selling, it was the most important driver behind securing private guarantee-backed borrowing, and accounted for 36.2% of all Q2 2026 functions.
For working capital mortgage functions, progress centered borrowing accounted for 20% and asset buy, growth and acquisition amounted to just about one in 4, displaying that elevated borrowing was additionally meant for longer-term funding.
Elevated borrowing amongst UK SMEs was taking place at the beginning of this yr too. In line with UK Finance’s Enterprise Finance Assessment, SME lending grew by 16% year-on-year and reached £5.3 billion in Q1 2026.
A rising borrowing atmosphere follows evident cashflow pressures dealing with SMEs. Analysis from 2025 by cashflow finance specialists, Novuna Enterprise Cashflow, discovered that 82% of SMEs confronted money move points and cited late buyer funds (36%) and seasonal gross sales shifts (35%) as foremost components.
Additionally they cited common financial uncertainty, with 27% mentioning surprising adjustments in buying and selling circumstances.
“I’m not stunned to see extra SMEs borrowing this yr” – Tim Harrison, Founding father of Unity Property Funding.
“I’m not stunned to see extra SMEs borrowing this yr. For us, borrowing isn’t about plugging gaps within the enterprise, it’s about utilizing capital effectively. If finance permits you to put money into property that generate robust long-term returns whereas preserving money for future alternatives, it may be a really highly effective device.
“If it’s structured correctly and backed by robust money move, borrowing may also help companies develop whereas remaining resilient if market circumstances change.”
“At Unity, we have a look at debt from two angles. Firstly, for our personal enterprise, the place we use borrowing to accumulate and develop our property portfolio. Secondly, when working with traders, the place we encourage them to consider carefully about how finance matches into their wider funding technique, reasonably than simply specializing in getting the most important mortgage potential.
“We additionally imagine several types of borrowing have completely different jobs. Lengthy-term debt is right for property we’re planning to carry for a few years, whereas our revolving credit score facility offers us the flexibleness to maneuver shortly when the best alternatives come alongside with out having to tie up massive quantities of money.
“The vital factor is being disciplined. Each funding we make is stress-tested earlier than we commit. We ask ourselves: if rates of interest went up once more tomorrow, would the rental earnings nonetheless comfortably cowl the borrowing? If the reply isn’t any, we merely don’t do the deal.
“I feel that’s in all probability why we’re seeing extra companies borrow at this time. The dialog has shifted away from borrowing for the sake of progress in direction of utilizing debt as a strategic device. If it’s structured correctly and backed by robust money move, borrowing may also help companies develop whereas remaining resilient if market circumstances change.”
