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Without more government assistance, a record number of small firms could close in the next 12 months.
After the country entered a third period of national lockdown earlier this month, the Federation of Small Businesses (FSB) said that more than a quarter of Britain’s 5.9 million small firms could be lost in 2021, including many self-employed workers that have so far been excluded from most government aid packages.
FSB national chairman Mike Cherry said: “The development of business support measures has not kept pace with intensifying restrictions.
“As a result, we risk losing hundreds of thousands of great, ultimately viable small businesses this year, at huge cost to local communities and individual livelihoods.”
The FSB highlighted several groups that have so far received little, if any, government support. They include:
- Self-employed limited company directors that pay themselves in dividends instead of drawing a salary
- Newly self-employed people
- Businesses in supply chains
- Businesses without commercial premises
The FSB estimates that there are between 700,000 and 1.1 million people that fall into the self-employed director category alone.
To support this group, the FSB has proposed a Directors Income Support Scheme that would mirror the Self-Employed Income Support Scheme and the employee furlough scheme. The proposed scheme would pay directors grants of up to £7,500 to cover three months of lost trading profits and would be limited to those earning less than £50,000 per year.
The Treasury said: “Our support schemes are designed to get help to those who need it most whilst protecting the taxpayer from fraud, but of course we keep everything under review and are always open to further ideas.”
Tom Fox, Licensed Insolvency Practitioner at Umbrella Insolvency said: “As the country battles to control the latest round of coronavirus infections, thousands of small businesses are on the brink of collapse.
“Now that, as the Prime Minister puts it, ‘the end of the journey’ is in sight, the government has a responsibility to ensure that every viable business survives through to the end of this crisis. How our leaders act in the next few weeks and months could make the difference between abject failure and certain success in response to the coronavirus.”
For more information on business insolvency in 2021, speak to a member of our team today. Call: 0800 611 8888.