The Chairman of the Federation of Small Businesses, Martin McTague has warned that almost half a million businesses are at risk of going bust within the next few weeks if the government doesn't give more support. He warned that, whilst the £15 billion cost of living package is a good thing, unless targeted measures were rolled out to employers, people could soon lose their jobs.

There is a huge issue with small businesses in the UK right now. Small businesses are facing around twice the rate of inflation for production and are likely to run out of capital because of this. This would mean that many businesses may end up going bust leading to mass unemployment.

The Office for National Statistics recent statistics show that 40% of UK small businesses currently have less than three months of cash and 10% of those businesses are in serious trouble. This equates to 200,000 small businesses in serious trouble with a further 300,000 having only weeks worth of reserves.

Rising energy bills, wholesale and production prices, import costs and fuel costs have contributed to many small businesses finding themselves in this position. They are finding themselves unable to trade at profit which is leading to a downward spiral of debt and unprofittability. 

In April of this year, consumer price inflation was at its highest level since the early 80's and the Bank of England has now estimated that inflation prices will rise even further to around 10% by autumn.

Many businesses are being forced to raise their consumer prices to maintain some level of profitability within their business and this has a knock on effect on customers being able to afford their services. For some, it simply isn't possible to continue trading.

Martin McTague explained that with no further support, the £45 billion given towards supporting businesses during the Covid-19 pandemic and designed to keep them afloat, will have been wasted. 

If you own a small business or are a director of a company and you have found yourself facing some of the issues discussed in this article then there are still options available to you. If you feel that your company may no longer be viable and isn't going to survive the current crisis then company liquidation may be an option you are considering. If you would like to talk to someone about this to see if this would be a good option for you and your business then feel free to fill in this form. Someone from LCI Limited Company Insolvency will give you a call as soon as they are free to discuss your circumstances and your options for the future. If limited company insolvency is the route you wish to take then our friendly advisers will be happy to pass you straight over to get the ball rolling for you. In a lot of circumstances, if you are on the payroll for your business, you may also be able to claim a redundancy payment during the insolvency process. If you are worried about paying back your bounce back loan then don't be. These were 100% backed by the government so, provided you used it according to the government guidelines at the time, this will get paid off for you during the insolvency process.