Debt levels ‘soaring among the UK’s self-employed’

Small business owners and self-employed people are increasingly grappling with high levels of debt, according to new research from SME advice service Business Debtline. The self-employed now make up 15% of the total employed population.

Findings show that 49% of the 36,000 people who contacted the service last year had debt totalling £10,000 or more. Nearly one-quarter (23%) owed more than £30,000. The report identified issues such as low and variable incomes, late payments and a lack of business management skills as some of the key financial sticking points for SMEs.

Business Debtline says that both business and personal debts are common among the individuals it serves, and the two are frequently combined. More than six in 10 callers surveyed (61%) said they had used personal credit at some point to pay for business costs in the past two years.

The report’s conclusions are based on data collected via Business Debtline’s advisers and surveys, as well as analysis from Experian. Overall, it found that callers are over represented in households that tend to be younger, with lower household incomes and high uses of credit. In addition, these individuals often have limited financial resilience in terms of pensions and savings.

“Many of the people behind these businesses are in need of advice and information at an earlier stage of their journey,” says Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs Business Debtline. “There is support out there, but the government needs to do more to proactively champion these opportunities to ensure that these businesses receive the help they need to succeed.”

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