Overall small business demand for funding levelled in Q4 2025 despite diverging sector trends. Working capital remained the dominant reason for borrowing, accounting for 37% of loan applications in Q4 2025 compared with 33% in Q4 2024. Average personal guarantee cover was £185,000, supporting an average loan of £269,732, a 22% increase year-on-year reflecting inflationary pressures and higher operating costs. Total PGI-backed loan applications across 2025 exceeded 2024, with growth concentrated earlier in the year. Quarterly application volumes were almost unchanged, dipping 0.1% between Q3 and Q4 2025. Construction PGI applications rose 10.7% while manufacturing demand fell 25.3%.
"Working capital to support cashflow continued to be the dominant reason for finance in Q4 2025, with 37% of all loan applications for this purpose, up from 33% a year earlier in Q4 2024, while applications linked to growth and expansion eased slightly. The average personal guarantee demand is now £185,000 (based on the level of insurance cover taken) against an average loan of £269,732 in Q4 2025."
"While the number of applications for personal guarantee insurance in Q4 2025 remained almost level with the previous quarter, dipping by just 0.1%, construction applications jumped 10.7% between Q3 and Q4 2025 reflecting ongoing demand for finance linked to contracts and project delivery. In contrast demand for funding and PGI from manufacturing firms fell by 25.3% over the same period, underlining continued caution around capital investment in the sector."
Read at London Business News | Londonlovesbusiness.com
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