New data reveals a sharp increase in demand for personal guarantee insurance (PGI) among UK construction firms, underlining the growing financial and personal pressure facing company directors across the sector.
Analysis from Purbeck Insurance Services, shows that applications for PGI reached record levels at the end of 2025. December 2025 marked the highest number of PGI applications ever recorded, while total applications in Q4 2025 were 10% higher than the same quarter in 2024.
The figures point to a clear shift in how construction directors are managing risk as borrowing conditions tighten and lenders increasingly require personal guarantees as a condition of finance.
Borrowing to survive, not to grow
The data highlights the challenging reality facing many construction businesses. More than half of PGI applications in Q4 related to loans taken out for working capital, indicating firms are borrowing to sustain operations rather than invest in growth. Only 16% of applications were linked to expansion initiatives, while 54% involved unsecured loans, where personal guarantees often represent a lender’s primary protection.
Todd Davison, MD of Purbeck Insurance Services said: “Construction firms are currently operating in one of the most financially difficult periods in recent years. Elevated borrowing costs continue to squeeze margins on fixed-price contracts, while payment delays, labour cost volatility and softer demand in some private commercial and residential markets are putting sustained pressure on cash flow.
“Although access to finance has not disappeared, lenders have become far more cautious. Banks and alternative funders are increasingly insisting on personal guarantees, particularly where loans are unsecured or balance sheets are under strain. For many construction firms, agreeing to a personal guarantee is now the price of securing working capital, equipment finance or contract funding.
“For construction firms navigating tight margins, fragile cash flow and cautious lenders, PGI has become a practical way to keep businesses trading while ensuring that personal risk remains proportionate.”
