Small businesses demonstrating resilience in financial aspects, claims Purbeck
In the second quarter of 2025, the landscape of Small and Medium-sized Enterprises (SMEs) in the UK has shown a promising shift, according to the latest analysis by Purbeck Insurance Services. The report highlights a cautious yet opportunistic environment, with SME lending evolving towards smarter, more strategic financing that supports sustainable growth and resilience amid economic uncertainties.
The number of SMEs needing finance to keep their business on an even keel has not been this low since Q3 2024, indicating a modest uptick in SME lending. Financial institutions are focusing more on quality and risk assessment, leveraging data analytics to better evaluate SME creditworthiness.
A substantial portion of loans are directed toward tech adoption, green initiatives, and digital transformation projects, reflecting SMEs’ priorities to innovate and improve operational efficiency. This shift towards growth-oriented financing is a positive sign for the UK economy, as SMEs contribute significantly to the country's GDP.
New initiatives combining government support and private capital are helping SMEs access affordable funding, especially in sectors hit by recent economic disruptions. This collaboration aims to level the playing field for SMEs, enabling them to compete effectively in the market.
Purbeck Insurance Services, a leading name in the industry, has launched a dedicated Broker Portal for Commercial Finance and Insurance Brokers. This portal allows brokers to gain a real-time view of PGI applications, policies, and other related information, streamlining the process and enhancing efficiency.
The report also emphasizes the growing role of integrated insurance products bundled with lending, providing SMEs with protection against various operational risks, thus making lenders more comfortable extending credit. Sector-specific strategies are also being implemented, with sectors such as clean energy, advanced manufacturing, and healthcare receiving targeted growth incentives and tailored lending products, aiming to foster sustainable expansion.
Purbeck Personal Guarantee Insurance, the UK's only provider of Personal Guarantee Insurance (PGI) to the owners and directors of SMEs, has seen a decrease in the number of small and medium-sized businesses needing personal guarantee backed finance for working capital. In fact, June 2025 was a record month for PGI applications, up 17.8% on June 2024. Applications for PGI grew by +3.2% year on year in Q2 2025.
The average personal guarantee demand from lenders for SME owners and directors was £194,499 in Q2 2025, a 6.4% rise compared to Q1 2025. Interestingly, 45% of loans were unsecured in Q2 2025, making them the most popular form of funding. SMEs are also spending more on assets, with a 9.7% increase in applications for personal guarantee backed finance to buy an asset.
A free networking event for SME lenders, PGI Business Link, is being hosted by Purbeck Insurance Services on 4th June. The event, held at O'Neill's in Broad Street, Birmingham, from 12-4pm, will provide attendees the opportunity to share best practices and discuss various topics related to SME lending.
Refinancing deals grew dramatically year on year by 53.6% in Q2 2025, indicating a positive trend in SMEs refinancing their debts at more favourable terms. Investment in growth initiatives also grew year on year by 38% in Q2 2025, further signalling a positive outlook for the UK's SME sector.
The current trend in SME lending and growth initiatives highlights a promising future for the UK's SME sector, with a focus on quality, strategic financing, and sustainable growth.
Event organizers are planning to host a networking conference for SME lenders on June 4, 2025, aiming to discuss trends and share best practices in SME investing. As the sector prioritizes strategic financing for growth initiatives, interest in unsecured loans and refinancing deals has increased, suggesting a positive outlook for the UK's economy.
