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Protect small businesses from the ‘threat’ of recovery

A new report that suggests a rise in interest rates coupled with a lower tolerance of company debt as the economic recovery takes hold could lead to a steep increase in small businesses failures demands that steps be taken to protect small businesses potentially at risk.

We have come to this conclusion following the publication of a report from The Corporate Finance Network, which suggests that 65 per cent of UK SME’s have poor credit ratings. The Network suggests that many have survived thus far through the support of HMRC, the banks and low interest rates. It says that when the ‘artificial economy’ comes to an end, businesses will either turn the corner or go out of business.

For many small businesses the recovery is yet to begin whilst for others it remains fragile and it is incumbent upon all of us to provide protection to small businesses as the recovery takes hold. Confidence is vital if the recovery is not only to be maintained but also to really take hold and deliver vibrancy back to the UK small business sector. Authorities have been quick to provide protection to other sectors and given that the majority of people in the UK either own or work for a small business, we would urge them to do so for the SME sector too.

The Corporate Finance Network said that warning signs for business owners that they be at risk from the recovery are if they struggling to pay creditors or HMRC within agreed payment dates; unable to get credit for even the simplest of agreements, such as leases on office equipment and reported losses or a reduced gross margin.

The Network suggests a detailed business health check of its productivity and profitability; building a plan for growth, and to seek out alternative finance solutions and restructuring plans before it is too late.

Small businesses are the beating heart of the UK economy and we need to make sure we keep them in robust health. In 2013 more small businesses were started in the UK than ever before. There are now 4.9 million small businesses in the UK, employing more than 24 million people and with a combined turnover of £3.3 billion; small businesses alone account for almost 60% of private sector employment and nearly half of all private sector turnover. They are that important.

Article written by Howard Robinson, head of communications at Ingenious Britain

This was posted in Bdaily's Members' News section by Ingenious Britain .