The first set of figures from the Insolvency Service for Q1 of 2020 showed that both individual and company insolvencies decreased, and the number of individual bankruptcies rose. The figures largely pre-date the Government lockdown and wider impact of the Coronavirus (COVID-19).
But analysis going deeper into the crisis by the Enterprise Research Centre has warned of a “pincer movement” with a surge in limited companies going bust being mirrored by a drop in new firms setting up.
Federation of Small Businesses (FSB) National Chair Mike Cherry, said: “These figures just go to highlight the scale of the challenge that small businesses right across the country are facing.
“There is a huge package of support available to those who need it, and in most areas, that package is doing its job in giving small firms who are facing difficulties the help that they need. But there is always more that can be done.
“The cash grants being issued by Local Authorities are reaching small businesses, but for many councils1, at least a third of small firms are still waiting to get the money into their hands. Councils must not delay if they are to prevent the collapse of thousands of small businesses.
“Areas such as the bounce back loan scheme which will go live on Monday (4 May), must have applications processed as promised within 24 hours.
“Crucially, the Job Retention Scheme, which is helping to keep money in the pockets of employees while safeguarding the long term future of small businesses, is doing a robust job. But for certain sectors, the restrictions on gatherings and the scale of the lockdown will mean that some staff will face the possibility of furlough for a lengthy period.
“That is why the Government must continue to constantly provide support in this way until the crisis ends. But it’s vital that as some industries do return to work, in what is likely to be done in stages, that the Job Retention Scheme reflects that too. Business owners should be able to bring full time staff back to work for a few days a week – whilst still using the furlough system for days when staff are not required – as they gradually resume business as usual.
“These are hugely worrying times for small businesses, and for many this is going to be a difficult period for much of the year, if we want to prevent more small firms who are the backbone of the British economy, from going under, then the right support must always be available.”