A survey by the Association of Chartered Certified Accountants in March revealed that one in 13 small business owners reported having suicidal or intrusive negative thoughts as a result of the challenges of the pandemic, which is a significant increase from last summer, when one in 200 were having these thoughts.

According to a recent report by Simply Business, 82% of small business owners admitted they had suffered with poor mental health in the past year, with financial worries causing the greatest concern.

The impact of financial stress has knock-on effects on both mental and physical well-being, says Kelly Hearn, a psychotherapist and co-founder of the Examined Life collective. “Conditions like depression, anxiety, obesity, hypertension and insomnia are more likely when financial stress is present, and there can arise a vicious cycle with deteriorating financial, physical and mental health all linked.”

Hearn says that financial stress can often cut straight to ‘survival stress’, with people questioning whether they can keep a roof over their heads or food on the table. “Not being able to meet monthly expenses or have enough money for unexpected emergencies are two of the biggest financial stressors. Survival stress can be overwhelming, activating the fear centre in our brains.”

Yet both stress and fear can play a part in freezing a business owner’s decision-making skills, warns Vicki Wusche, a business consultant and author. “Through conversation, I identify those business owners who are stressed, and those who are actually suffering ‘financial PTSD’,” she says. “The difference is that stress may lead you to make poor decisions, while financial PTSD numbs you – you take no action, you are literally in shock, like a rabbit in the headlights waiting for the financial tsunami to squash you. You are running on pure fear, and that’s both draining and unhelpful.”

It’s therefore vital to take action, she says. “The only way to control fear is to face it, and that’s why getting to understand your financial position is crucial.”

Hearn advises her clients to take it one step at a time. “This could be merely arranging online banking, consolidating credit cards, or looking at recent bank statements to get a clearer picture of monthly spend. Pick one step and do it. Then pick the next right thing. These types of small actions build confidence that we can indeed improve our financial understanding and well-being.”

For Deepak Shukla, founder of lead generation business Pearl Lemon, money and cash flow have significantly impacted his mental health. “When Covid-19 hit, l lost around £3,800 per month in recurring revenue,” he says. “Other small businesses were starting to fold. I became more anxious and stressed, and it was harder to sleep, at the start of the pandemic, when everything was so uncertain.

“As founders, we tie ourselves up in our businesses. That’s why it can take such a toll when money or mental health issues arise.”

As well as confiding in his partner, he found support through cognitive behavioural therapy and self-development books. “I’ve learned that coming to terms with the chaos of the pandemic and running your business is paramount in coping,” he says. “I also accepted what I couldn’t control and turned to what I could control. I tightened up spending where possible and looked at how I could change my marketing strategies amidst the pandemic.”

If you’re experiencing money problems, it’s important to seek help from someone you can trust. Some small business owners can turn to their accountant, but, in the absence of this, could look to a financial adviser or therapist.

Yet while these can be immensely supportive resources, a ‘money buddy’ can be a more accessible starting point for many, suggests Hearn. “Is there a friend or colleague who is similarly committed to improving their financial well-being? Can you buddy up to share questions and resources, to keep each other accountable for small actions and goals?”

It’s easy to make the mistake of thinking that managing money is about basic maths, says Julie Baker, the bank’s head of enterprise. “Actually, some of the leading reasons people fall into problem debt are completely out of our control: the break-up of a relationship, the loss of a loved one, even a gap in employment during the pandemic.”

In difficult times, she adds, employees will often look to their employers for help. Although talking about money can be uncomfortable, Baker proposes that small business owners enable open, two-way communication. “You don’t need to be an expert with money to start helping colleagues,” she says. “Remember, your role isn’t to give advice; it’s to signpost them to the right materials. Think about how you create a safe space to talk about money using the power of national campaigns, coffee sessions, videos and news articles. Our emotions, values and upbringing all shape our relationship with money – so think about appealing to those rather than just facts alone.”

She adds: “A lot of people don’t have financial security, and it’s important as a bank that we help customers and colleagues to get back on track.”

Sarah-Jane Butler, CEO and founder of Your Employee Wellbeing, says constant uncertainty has been a key contributor to the huge economic impact of the pandemic on both businesses and their employees. “This uncertainty has led to anxiety and heightened stress in many as they wonder if their jobs or salaries are safe, or their businesses will survive,” she says. “Not knowing if you are going to be able to pay the bills at the end of the month can lead to more than sleepless nights. And the pressure of poor financial well-being impacts families as well as individuals on so many levels.

“While the financial downturn has been a large concern for business owners, especially SMEs, for their employees, who feel a greater lack of control, the effects on mental health have been more defined,” Butler adds. “It is very important, therefore, that employers provide as much support and advice as possible, whether through access to financial coaches, webinars, fact sheets, signposting or counselling sessions. At Your Employee Wellbeing we know that people often feel embarrassed talking about money, but the more support an employer can give, the greater the productivity and mental well-being of their employees. Not providing the right support is a vicious negative circle. Being open and supportive has the opposite positive effect that will make a difference.”

Shukla was keen to reassure his employees that they would continue to receive stable pay, as soon as he knew for certain that he could continue to pay people. “At the start of the pandemic, and frequently thereafter, reassuring employees also meant updating them as and when I got new information. If we secured a new client – or even if we lost one – I told them straight away.”

Financial worries among staff can also lead to a stark drop-off in employee productivity, adds Hearn. “Offering help is not only the human thing to do; it makes good business sense, too. Addressing financial wellness and providing support also shows employees that their employer understands and cares about them, which leads to trust, loyalty and, ultimately, retention.”