In a new survey of 400 small businesses by Purbeck Personal Guarantee Insurance to gauge the financial and emotional resilience of owner/managers, 1 in 4 respondents (24%) said their mental health had been directly affected by the stress of managing the finances of their business in the past year.
While 1 in 4 is far from positive, this is a significant improvement from 49% in the same survey last year and underlines the tenacity and resilience of small business owners, as they continue to face challenging economic headwinds.
Those who felt that their mental health had been impacted were more likely to be female than male, running their businesses in London and the South East, and aged 25-34.
Tellingly, the survey also found that the owners/managers whose mental health had been affected were more likely to need new finance in the next year to support cashflow and 31% had taken on personal debt to help fund their business.
Furthermore, 25% had backed out of a loan because it had a personal guarantee attached and 13% had been refused a business loan in the last two years.
Todd Davison, MD of Purbeck Personal Guarantee Insurance says: “Although the cost-of-living crisis appears to be easing, the cost of doing business crisis has escalated in the past year, not least the cost of servicing existing loans. Those who want to refinance or access new funding are facing demands from lenders for personal guarantees for loans as small as £5,000 or £10,000. This can ramp up anxiety levels and as our survey has shown, some people rather walk away than make that commitment."
“One way to address financial fears on a practical level is through Personal Guarantee Insurance which can offer small business owners greater confidence when securing a personal guarantee backed loan. This innovative insurance specifically for small businesses includes advice and mentoring support if a firm gets into financial distress as well as specialist mediation support when the debt needs to be settled. Ultimately it helps to keep business and personal life separate for small business owners and bring greater peace of mind.”