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FSB warns that at least 250,000 small businesses will fail by 2021 if the government does not act now

According to the Federation of Small Businesses, at least 250,000 small businesses could emerge forever this year.

Confidence is at an all-time low and a record number of companies have revealed plans to close their businesses in the next 12 months, the latest Small Business Index shows.

Meanwhile, one in five SMEs has reduced the workforce in the three months to December, and one in seven expects to do so by March this year.

SMBs were mistreated in 2020 when the coronavirus pandemic forced them to close their doors

SMBs were mistreated in 2020 when the coronavirus pandemic forced them to close their doors

It comes when the small business economy was battered in 2020, when the coronavirus pandemic took hold of the nation, forcing people to stay home and close stores for much of the year.

And with a third lockdown underway, many are even scared Tighter restrictions will be enforced in the coming weeks.

Just under 5 percent of the 1,400 companies surveyed for the survey said they expect to close within the next 12 months, putting the UK on track to lose more than a quarter of a million businesses.

The figure doesn’t even reflect the threat of closure facing those who still hope to survive despite having frozen their operations, reduced the workforce, or incurred significant debt.

Mike Cherry, national president of the Federation of Small Businesses, an organization representing small and medium businesses in the UK, said the development of business support measures has not kept pace with increasing constraints, putting us at risk of hundreds from thousands of small businesses.

He added: “A record number of small businesses say they plan to close in the next 12 months, and they said so before the news of the latest lockdown got out. This is a huge cost to local communities and individual livelihoods.

At the start of the first national lockdown, the British government was brave. The support mechanisms provided were not perfect, but they were an exceptionally good starting point.

“That’s why it’s so disappointing that this next lockdown is met with a wail.”

According to the Department for Business, Energy and Industrial Strategy, there are 5.9 million small businesses in the UK.

According to the index, the confidence of this bloodline in the economy is at one of the lowest points, namely -49.3. This is 27 points lower annually.

The only time in the index’s ten-year history that this was lower was in March 2020, when the first lockdown was implemented.


Don’t miss out on financial support – check out www.gov.uk/coronavirus/business-support to see what’s available. Please be aware that regional differences apply.

1. One-off additional subsidy for recreation, catering and retail trade

This is awarded to closed businesses and based on the taxable value of the property. Grants amount to £ 4,000, £ 6,000 or £ 9,000.

There is also a £ 594 million discretionary fund for other companies affected by lockdown.

Applications must be submitted through the local council.

2. Seiss

The income support scheme for the self-employed has been extended to the period November 2020 to January 2021 and a second benefit from February to April next year. The initial payment will cover 80 percent of the average monthly trading profits or £ 7,500 (whichever is less). Applications for the November to February grant must be submitted no later than January 29.

3. Cbils

Small businesses and sole traders with annual sales of less than £ 45 million can apply for the Coronavirus Business Interruption Loan Scheme for amounts up to £ 5 million. The scheme will run until the end of March this year and you must demonstrate that your usually viable business has been affected by the coronavirus.

4. Deferred VAT

If you were required to make a VAT payment between March 20 and June 30, 2020, you can defer payment until the end of March this year, or you can sign up for the new VAT deferral scheme when it launches.

5. Return loan for the coronavirus

You may be able to borrow between £ 2,000 and £ 50,000 if you are a small business or self-employed. The scheme will run until March 31.

6. Support for local restrictions

Businesses that were open as usual and then had to close due to local level restrictions may be able to receive a cash grant from their municipality based on the taxable value of their property. It is available for any 14-day period that a business was closed. Businesses that remained open but were seriously affected may also qualify.

7. Grant of Additional Restrictions

Available to supply chain and event businesses that have closed or are adversely affected by lockdown. Details can be found via municipalities.

8. Reduction of corporate rates

Companies in the retail, hospitality and leisure sectors in England are not required to pay corporate rates for the tax year ending April 5, 2021.

No hope for improvement

Meanwhile, 80 percent of those surveyed do not expect their performance to improve in the next three months. The current lockdown will be reviewed on February 15th.

Cherry said, “There are meaningful lifelines for retail, leisure and hospitality businesses, which are very welcome as far as they go. But this government must realize that small business is much larger than these three sectors.

‘Business leaders, starting self-employed people, chains and people without business premises are still left out in the cold. March action will be too late to stop closings. ‘

Nearly a quarter of companies cut their workforce in the quarter, from 13 percent early last year, while another one in seven said they will be forced to cut numbers in the next three months.

In addition, the share of small businesses expecting a drop in profitability for the next quarter has also risen sharply, from 38 percent to 58 percent. The figure is at an all-time high.

Exporting companies are feeling extra pressure as the new EU-UK trade deal comes in, almost half of which are expected international sales fall between January and March.

Cherry added: “Our exporters are trying to convey what a new EU-UK trade deal means to them, without the money they need to make adjustments.

Direct funding to help them manage new obligations in the form of transition vouchers is urgently needed.

“This government can stem losses and protect the businesses of the future, but only if it acts now.”

The Federation of Small Businesses has developed a five-point plan to address the gaps in the current support landscape.

This includes further cash grants for small businesses, a taxable allowance for directors of limited companies, and assistance for more recent self-employed workers.

The Federation of Small Businesses has established a five-point plan to help small businesses, and 'looks forward to seeing the Treasury embrace it'

The Federation of Small Businesses has established a five-point plan to help small businesses, and 'looks forward to seeing the Treasury embrace it'

The Federation of Small Businesses has established a five-point plan to help small businesses, and ‘looks forward to seeing the Treasury embrace it’

Meanwhile, SME accounting software FreeAgent found that from its own data 1.74 million UK SMEs had already been completely disrupted by the virus.

Ed Molyneux, CEO, said: “In addition, nearly 300,000 SMEs were unsure whether they were eligible for government support.

When we asked small business owners in late 2020 if they thought enough had been done to help SMEs during the pandemic, less than a quarter of respondents said yes.

While the UK government has taken some positive initiatives in this time of need, such as the holiday scheme, the fact that such a small number of SME owners say they feel sufficiently supported is a sign that this simply has not been enough.

Small Business Essentials

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