Covid: Record number of small firms ‘set to close’

The quarterly monitor by the Federation of Small Businesses (FSB) suggests that a record number of small businesses expect to shut in the next 12 months unless the Government steps in with more help.

This number, the highest since the FSB began collecting data in the aftermath of the financial crisis, does not include thousands more of the UK’s 5.9 million small firms which are struggling but hope to continue trading.

Among other groups, the FSB is concerned that directors of small companies, who pay themselves in dividends rather than drawing a salary, are not receiving any help from the government.

A quarter of a million businesses could be lost, it said. The FSB has proposed support measures to ministers which aim to help many self-employed workers currently excluded from aid. A recommended Directors Income Support Scheme would pay grants of up to £7,500 to cover three months of lost trading profits. It would be limited to those who earn less than £50,000 a year. Chancellor Rishi Sunak is currently considering the proposal.

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.”

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