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Value of business loans rise – putting SME owners' homes and savings at risk

ended 23. September 2026

New analysis of personal guarantee backed small business loans shows how the rising cost of doing business over the past 18 months – notably the increase in National Insurance contributions – has led to an increase in the value of loans taken on by small business owners, outpacing the value of the family home in many cases. 

The family home is an asset used as security in a personal guarantee, putting it at risk if the business fails. The analysis demonstrates in stark terms, the increased level of risk small business owners have faced.

Data from Purbeck Insurance Services, the UK’s only provider of personal guarantee insurance to small and medium sized business owners and directors, shows the average personal guarantee backed loan is £317,000 compared with the average house price of £271,204 (Q2 2026) for the UK.

The median loan value of £190,000 is still close to the average house price in the North West,
(£218,222), now also home to the Prime Minister's new Number 10 North. Purbeck has seen a
broadly consistent rise in the average and median value of personal guarantee backed loan values since quarter 1 2025, against a backdrop of low inflation rates and a housing market in the doldrums.

  • How risky is this for small business owners?
  • How do these loans differ from normal personal loans?
  • They could lose their family home if their business fails. Is this well-known, or is it a hidden risk to these loans?
  • What is your advice to small business owners?

Responses by tomorrow morning.

4 responses from the Newspage community

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Tony SanchezVerified
Founder at Bridging Loan Directory
As a small business owner, the important question is what I would personally owe if the company could not repay. Comparing the average loan with the average house price makes a striking headline, but it does not answer that.

A personal guarantee does not automatically mean the family home has been charged as security. It can nevertheless expose personal assets if the guarantee is enforced.

BLD has just reported on a developer who failed to overturn a statutory demand for approximately £430,000 arising from a personal guarantee. That makes the consequences tangible.

Before signing, owners need to understand the liability limit, whether interest and enforcement costs sit within it, and when the guarantee ends. Independent legal advice should explain those consequences clearly.

Access to funding matters, but the monthly repayment is only part of the decision. The personal exposure deserves just as much attention.
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Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
A personal guarantee can turn a business problem into a family financial crisis. Unlike a normal company loan, limited liability may not protect the director if they have personally guaranteed the debt.

When average guaranteed borrowing is now greater than the average UK house price, the numbers are serious. For some owners, their business, savings and potentially their home are effectively sitting in the same risk basket.

The danger is that a personal guarantee can feel like another document required to secure funding. Its significance becomes painfully clear only when the business cannot repay.

Before signing, owners should understand exactly what they are guaranteeing, whether liability is capped, what personal assets could be exposed and what happens on default. Independent legal advice is important. Most importantly, stress-test the borrowing against a bad year, not just today's trading.
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Paul DenleyVerified
CEO at Oakham Wealth Management
A personal guarantee turns limited liability back into personal liability, and the family home is often the biggest asset within a lender's reach. With costs rising, not least higher employer NI, the average PG backed loan has reached £317,000, above the average UK house price, so many owners are now guaranteeing more than their home is worth.

The real test is why you're borrowing. Bridging a cash flow gap in a sound business is one thing; using a guarantee to prop up one that's at risk is quite another, and sometimes the braver decision is to let it go. It's hard to see the fairness in families losing their homes over cost increases they couldn't reasonably have foreseen.

Plan to negotiate the guarantee down, cap it at a fixed sum rather than the whole debt, insist it steps down as the loan is repaid, and consider PG insurance. Above all, never guarantee more than you could survive losing.
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Tony RedondoVerified
Founder at Cosmos Currency Exchange
Since 2024, the cost of doing business in Britain has climbed relentlessly with higher employer National Insurance, a lower threshold, big minimum wage rises and a mountain of new regulation, including the Employment Rights Act. Small firms are absorbing the lot, and average small business personal guarantee (PG) loans have reportedly hit £317,000, more than the average UK house price of £271,204. Sign a PG and you override limited liability: your home and savings are on the line if the business fails. There's no Consumer Credit Act safety net here, the lender goes straight for your personal assets. Too many directors sign during growth spurts or cash flow strain without grasping that and end up out of the frying pan and into the fire. My advice? Audit every existing guarantee. Negotiate caps and release clauses. Consider Personal Guarantee Insurance (PGI) for shortfalls. And never put your home up as collateral.