On average, small business owners have personal debts of £30,514. This is more than 50 per cent higher than the £20,023 owed by the average person.

The research, conducted by the Consumer Credit Counselling Service for The Independent, shows that the majority of this debt is in the form of high-charging short-term credit cards and personal loans.

“With the economic difficulties, the self-employed and small business owners are plugging the gaps in their personal and business finances with these short-term credit card and loan debt, perhaps because they can be raised a little easier than standard business loans,” says Una Farrell, head of communications at the Consumer Credit Counselling Service.

The level of arrears for key household bills such as council tax or utilities was also found to be much higher among small business owners. In these areas, debt levels among these groups are on average 10 and 20 per cent higher than the norm. “It seems that people with their own businesses are in a far worse position financially than the average,” adds Farrell.

One of the chief challenges that business owners and the self-employed face is late paying and non-paying customers, says Alex Hilton-Baird, MD of Hilton-Baird Collection Services.

“The knock-on effect of late payment hits small businesses the hardest of all. If payment doesn’t reach them, it is often the case that they cannot afford to pay their suppliers,” he says.

How are you keeping your business afloat? Do you find you need to use credit cards and personal loans to plug the gaps? Leave your comments below.

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