Almost a fifth of small businesses could collapse within the next four weeks in spite of extensive support measures already announced by the Government.
The Corporate Finance Network, which represents regional, independent accountancy firms across the country, said that it believes 18% of all SMEs may not be able to survive unless the Treasury takes further action.
Its research across 13,000 SMEs suggests that if the the COVID-19 lockdown lasts for moere than three months, 31% small businesses could close down by June.
That means that almost four million people would lose their jobs in the next few weeks.
The Corporate Finance Network said it 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, said: “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.”
McGregor said the netowrk already has 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 would work to “minimum fees using streamlined agreements”, and all can be finalised to launch within a week, she said.
She said: “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 and the equivalent in Scotland, Wales and Northern Ireland.”
McGregor said the plan would also require a series of tax reliefs for Corporation Tax and longer term Capital Gains Tax which she said represents a return for the risk the Government is asking companies to take when merging with a failing business.
She said: “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 four million people in jobs, we need to encourage and facilitate 250,000 deals within the next few weeks.”
McGregor said this could “absolutely” be done by incentivising them, supporting them, and with the “full backing and incentive” of the UK Government.
McGregor said: “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.”