A quarter of a million small businesses are set to go bust, Lancashire-based organisation warns

The FSB said its research showed that one in five smaller companies cut jobs in the three months to December, and one in seven expect to do so in the coming quarter.

A survey of 1,400 firms suggested a record number of small business owners were planning to close over the next year while exporters were feeling the strain as a new EU-UK trade deal beds in.

The proportion of small businesses forecasting a reduction in profitability for the coming quarter has “spiralled” over the past year to an all-time high of 58 per cent, the report said.

Half of exporters expect international sales to drop in the next few months, up from a third this time last year, the study indicated.

FSB chairman Mike Cherry said the development of business support measures had not kept pace with intensifying restrictions caused by the coronavirus crisis.

He said: “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.

“A record number say they plan to close over the next 12 months and they were saying that even before news of the latest lockdown came through.

“At the outset of the first national lockdown, the UK Government was bold. The support mechanisms put in place weren’t perfect but they were an exceptionally good starting point. That’s why it’s so disappointing that it’s met this second lockdown with a whimper.

“There are meaningful lifelines for retail, leisure and hospitality businesses, which are very welcome as far as they go, but this Government needs to realise that the small business community is much bigger than these three sectors.

“Company directors, the newly self-employed, those in supply chains and those without commercial premises are still being left out in the cold.”

Paul Foster, FSB Business Development Officer in Lancashire, said: “Businesses across the Fylde Coast have been hard hit and the latest round of support announced last week will help to keep some retail, leisure and hospitality businesses afloat. However, so many gaps remain and some businesses will get no new support.

"Cash reserves have long since been exhausted and many business owners are now keeping their businesses alive using personal finance and credit cards, because they have insufficient income to pay the bills.

"Discretionary grants are also being made available via local councils but there wont be enough to satisfy the demand. We also need to see support for Company Directors. Many of these business owners have had no income now for nine months.”

A Business Department spokesman said: “We understand these are extremely challenging circumstances for businesses, which is why we have put in place one of the most comprehensive and generous packages of business support in the world worth £280 billion.

“This includes a new one-off grant worth up to £9,000, VAT relief, various loan schemes, a business rates holiday as well as the extended furlough scheme.”

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