skip to main content
  • *
  • *
Find Insight DIY on
* * *


Research Indicates Almost A Fifth Of SMEs Will Collapse In The Next Month

Closed sign shutterstock_26561308 725 x 500.jpg

The Corporate Finance Network, representing some of the UK’s most proactive and commercially astute regional, independent accountancy firms, has undertaken research amongst 13,000 SME’s which predicts that in the next 4 weeks, as a result of the COVID-19 lockdown, 18% of all SMEs will not be able to survive, despite the support measures currently announced by the Government. If the lockdown lasts 3 months or more, the situation looks even more dire with accountants in the network reporting that 31% will have to close down their business by June.

SMEs, (typically less than 250 employees), account for 99.9% of the private sector employment in the UK and there are 22 million employees working for these private sector businesses.

This research predicts that almost four million people will lose their jobs in the next few weeks and in an attempt to stop this happening, The Corporate Finance Network has put together a ready-made solution for the UK Government to adopt, based on a “Rescue and Recovery” incentive for successful SMEs. This would be asking the more robust small businesses to ‘buy’ the ‘at risk’ businesses in their sector, with a view to retaining the employees and maintaining the trade and turning it around once the lockdown is over.

Kirsty McGregor, founder of The Corporate Finance Network explains: “We have taken it upon ourselves to create a robust and fully researched ‘plug and play’ solution for the logistics of this SME rescue scheme, and we already have in place a portal to advertise the businesses on, accountants on stand-by to advise on the structure of any deal, and lawyers to prepare the legal documentation, all working to minimum fees using streamlined agreements, and all can be finalised to launch within a week.

“We are asking the Treasury to fully consider our proposal, with them underpinning it with grants for supporting employment – possibly distributed via the 38 Local Enterprise Partnerships (LEP Network) and the equivalent in Scotland, Wales and Northern Ireland.  In addition, it would require a series of tax reliefs for Corporation Tax and longer term Capital Gains Tax which represents a return for the risk the Government is asking companies to take when merging with a failing business.

“We have some excellent entrepreneurial business owners in the UK, but they are not usually motivated – or indeed accustomed – to make acquisitions, often perceiving such deals as high-risk, and complicated. Historically, over the last three years in the UK, there has been just over 4,500 acquisitions by SMEs; to save a significant percentage of the UKs economy and keeping almost 4 million people in jobs, we need to encourage and facilitate 250,000 deals within the next few weeks. We can absolutely do this by incentivising them, supporting them, and with the full backing and incentive of the UK Government.

The Corporate Finance Network recognises that it will not be an easy decision for an established SME business owner to take on a struggling small business, but if this can be achieved, businesses could be saved, along with almost 4 million jobs and reduce the impact that COVID-19 the economy and UK SME business recovery.

McGregor concludes: “We have the professionals and infrastructure in place – now we are asking the Chancellor and Government to take a briefing from us to understand how it could work, and ask that a scheme such as this is put this in place before it is too late”. 

Source : Corporate Finance Network 

For all the very latest news and intelligence on the UK's largest home improvement and garden retailers, sign up for the Insight DIY weekly newsletter. 

02 April 2020

Related News

view more UK DIY News

Insight DIY always publishes the latest news stories before anyone else and we find it to be an invaluable source of customer and market information.

Max Crosby Browne - CEO, Home Decor

Don't miss out on all the latest, breaking news from the DIY industry