Construction Sector is Feeling The Strain, Says Purbeck

The latest feedback from Purbeck highlights the stress factors in the construction sector right now;

Applications for personal guarantee insurance (PGI) from construction businesses to support business loans rose 113% year on year in the third quarter of 2026, according to new data from Purbeck Personal Guarantee Insurance. Applications were also 19% higher than in Q2.

Each application for PGI represents a construction director who has been asked to back business borrowing with a personal guarantee. If the business cannot repay, the lender can pursue the director’s home, savings and other personal assets, even when the business is a limited company.

Construction accounted for 18.1% of all applications to Purbeck in Q3, up from 13.8% a year earlier. In September 2026, the sector’s share rose to more than one in five (20.4%), with applications up 153% on September 2025. With a quarter still to go, construction applications in 2026 are already 46% higher than the total for the whole of 2025.

Many contractors and smaller building firms have few physical assets to offer as security, so lenders ask for a personal guarantee instead. In Q3, more than half (51.5%) of construction applications were linked to unsecured loans, up 115% year on year.

The sums at stake are also rising. The average level of protection requested by construction firms rose 31% year on year to £232,993.

Working capital remained the most common reason for borrowing, accounting for 46% of construction applications. That is down from 51% a year earlier, as borrowing for growth and development rose faster. Applications to fund investment in growth rose 167% year on year and now make up 16% of construction applications.

Todd Davison, Managing Director, Purbeck Personal Guarantee Insurance, said: “Construction firms are borrowing on a bigger scale. Applications for PGI from the sector have more than doubled in a year, and construction firms are now asking for more cover than the average business.

“It is encouraging to see more firms borrowing to grow and to fund development, rather than only to manage cash flow. But most of this lending is unsecured, which means it is the director’s personal guarantee, and often their family home, that stands behind it.

“Construction is a sector where one late payment or a failed project can put a business under pressure very quickly. Before signing a guarantee, directors should understand exactly what they could be liable for, take independent advice and think about how they would protect their personal assets if things went wrong.”