Small business owners owe over £30,000 on average

Small business owners and the self-employed have much higher debts than the average person, the country's biggest debt charity has said.

Research by the Consumer Credit Counselling Service (CCCS) exclusively for The Independent shows that the average personal debt of a small business owner or self-employed person stands at £30,514, compared to an average for the debt charity's clients of just £20,023.

The majority of this debt is in the form of high-charging short-term credit cards and personal loans. "We are finding that 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," said Una Farrell, head of communications at the CCCS.

Nevertheless, the CCCS adds that the level of arrears for key household bills such as council tax or utilities is far higher among the self-employed and small business owners. "In all these areas debt levels among this group are on average between 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," Ms Farrell added.

Alex Hilton-Baird, managing director of Hilton-Baird Collection Services, said that one of the chief challenges business owners and the self-employed were facing was late paying and non-paying customers. "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 said.