38% of SME loans in October focused on working capital

New data from  Purbeck has shown that 38% of SME loans taken in October were purely for working capital, to sustain cash flow.  This is the highest proportion the business has recorded since the start of 2025.

According to the latest Barclays Business Prosperity Index, 55% of SMEs have paused investment plans amid heightened economic uncertainty, 7% more than last year. At the same time, insolvencies are rising sharply. The Insolvency Service has reported a 16.7% year-on-year increase in business failures, with more than 2,000 companies entering liquidation in October alone.

The analysis shows just how financially stretched the UK’s SMEs have become. Lending data for Q3 2025 revealed that average SME loan value has jumped 42% year-on-year, rising to £289,827 whilst loans for young businesses (2 years) hit a record £155,257, up 64%

Todd Davison, Managing Director of Purbeck Insurance Services, said “Small businesses are remarkably resilient, but they’re facing a perfect storm—rising costs, political uncertainty, and increasing pressure to take on more personal risk to secure finance. The Budget must give them breathing space. SMEs need stability and clarity from the Government to invest confidently rather than operate in survival mode.

“Our data shows loan values at record highs and 38% of personal guarantee-backed loans now used just to maintain cashflow. At the same time, insolvencies are climbing. This is not a market that can absorb further shocks. The Government has an opportunity on 26th November to restore confidence and unlock billions of pounds of potential investment.”