# Small businesses use borrowing to shore up cashflow in Q4 2025

By Todd Davison — 2026-01-20

New analysis of small business loan activity in Q4 2025 shows working capital to support cashflow continued to be the dominant reason for finance in Q4 2025, with 37 per cent of all loan applications for this purpose, up from 33 per cent a year earlier.

The average personal guarantee demand for a small business loan is now £185,000 against an average loan of £269,732 in Q4 2025.

This loan value has risen 22 per cent on Q4 2024, reflecting inflationary pressures and higher operating costs across the economy.

Todd Davison, managing director of Purbeck Insurance Services, the provider of personal guarantee insurance to SMEs, said: “Many SMEs are prioritising working capital and cashflow support over growth-led borrowing.

“That reflects a pragmatic approach as businesses manage higher costs and economic uncertainty.

“That said, there are signs of growing ambition beneath the surface.

“So while our own data indicates that, as businesses move into 2026, the focus remains on stability and cashflow in the near term — this could begin to shift as confidence improves and funding conditions ease, despite ongoing concerns around borrowing costs.”

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