Company insolvencies have fallen 5% since September last year, but the picture is more complex than that headline suggests. The number of compulsory liquidations is 25% higher than in September 2025. For many directors of these businesses, the debt does not end with the company. Lenders often ask SME owners to sign personal guarantees to secure finance, which can leave their homes and personal savings exposed if the business fails.
Todd Davison, Managing Director at Purbeck, says: “Small business owners are the people most likely to have signed a personal guarantee to keep their company funded. This Budget is a chance to recognise that risk and make it easier for them to borrow, grow and recover when things go wrong.”
Make the Growth Guarantee Scheme work harder for directors
The Growth Guarantee Scheme gives lenders a government-backed guarantee on part of a loan, but the borrower remains liable for the full amount. Purbeck is calling for greater transparency on how often directors are still asked for personal guarantees on scheme-backed lending, and clearer guidance so that business owners understand their exposure before they sign.
Better information on personal guarantees at the point of borrowing
Personal guarantees for business lending sit largely outside consumer credit protections. Purbeck is calling for plain-English, government-backed guidance for directors on what a guarantee means, when it can be called in and how they can protect themselves.
Flexible support with tax debt
HMRC’s Time to Pay arrangements are a lifeline for viable businesses with temporary cash flow problems. Purbeck would like the Budget to protect that flexibility, so that businesses facing a short-term squeeze are not pushed towards insolvency.
Ease the cost of doing business
Purbeck supports calls to raise the small business rates relief threshold and the VAT registration threshold, and to avoid further increases in employment costs. Each would help SMEs keep more cash in the business, reducing the need to borrow and the personal risk that comes with it.
Support second chances for entrepreneurs
Many directors who lose a business go on to start again. Purbeck would welcome a capital gains tax relief that rewards entrepreneurs for reinvesting in a new UK business, and would like it to reflect the realities of founders rebuilding after a failure.
Todd Davison concludes: “When a business fails, the director with a personal guarantee can lose far more than their company. Most of the measures on our list cost little but would make a real difference to the people taking that risk. A Budget that backs SMEs needs to back the people who guarantee them, too.”
Key takeaways
- Company insolvencies have fallen 5% since September last year, but compulsory liquidations are 25% higher than in September 2025, and directors who signed personal guarantees can see their homes and personal savings exposed if the business fails.
- Purbeck is calling for greater transparency on how often directors are still asked for personal guarantees on Growth Guarantee Scheme lending, and clearer guidance so business owners understand their exposure before they sign.
- Personal guarantees for business lending sit largely outside consumer credit protections, so Purbeck wants plain-English, government-backed guidance on what a guarantee means, when it can be called in and how directors can protect themselves.
- Protecting HMRC’s Time to Pay flexibility, raising the small business rates relief and VAT registration thresholds, and avoiding further increases in employment costs would help SMEs keep more cash in the business and reduce the need to borrow.
- Purbeck would welcome a capital gains tax relief that rewards entrepreneurs for reinvesting in a new UK business, reflecting the realities of founders rebuilding after a failure.
