Almost one in four small business owners are experiencing mental health problems because of the stress of managing their finances.
The figure of 24% was down from 49% last year, when high inflation and interest rates and spiralling energy bills were putting pressure on small businesses.
The most likely people to be experiencing high levels of stress were business owners in London and the southeast, aged between 25 and 34, and predominantly female, a survey by Purbeck Insurance found.
Those affected by mental health issues were more likely to need new finance within the year to support cashflow and almost a third (31%) had taken out personal loans to fund their companies.
The survey also found that 25% had withdrawn from a loan because it had personal finance attached and 13% of them had declined a business loan in the last two years.
Todd Davison, managing director of Purbeck Insurance said: “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.”
He added: “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.”
“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.
Todd Davison, Managing Director, Purbeck Insurance
