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Fifth of Business Owners Take Pay Cut Due to Covid, Research Suggests

Posted 1 months ago

Fifth of Business Owners Take Pay Cut Due to Covid, Research Suggests
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New research has revealed that just under a fifth of small business owners declared that they had taken a pay cut during the coronavirus pandemic.

According to Purbeck Insurance Services, 14% of SME owners had not paid themselves at all during the crisis. The survey, based on feedback from small- and medium-sized enterprise (SME) workers, also revealed that a fifth confirmed the director of their company has a personal guarantee for a loan for the business.

80 per cent said their boss had been transparent with them about the firm’s finances during the pandemic and 50 per cent felt very supported by their employer.

“Transparency creates trust, making staff feel included and valued but it also helps them understand exactly what’s at stake for the owners of the business,” said Todd Davison, managing director of Purbeck Insurance Services.

“Based on our survey, one in five owners and directors of SMEs are shouldering huge personal financial risk because they have put their home and other personal assets on the line for a business loan by providing a personal guarantee to the lender.

“It is their responsibility alone to settle the debt if the business fails unless they have personal guarantee insurance in place.

“Our additional concern is the SME owners and directors who have taken the serious step of not paying themselves – a situation that for most will be unsustainable.

“If SME owners start to look round for finance independent of any government support it is vital they look at the ways they can mitigate the risk of a personal guarantee backed loan as the options outside of this type of loan could become quite limited.”

Author: Sacha Bright & Oliver Murphy

Disclaimer

To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed. Nextfin is not liable for any damages arising from the use of or inability to use this site or any material contained in it, or from any action taken as a result of using the site.  



Tagged: sme entrepreneur alternative finance coronavirus news



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