The directors putting their homes on the line deserve a Budget that backs them

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.”

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.

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.

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.

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.

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.”