Small firms need financial help due to cold weather
22 December 2010
James Falla (about the author)
The Federation of Small Businesses (FSB) has called for temporary measures to help the UK's small firms through the continuing cold snap.
Specifically, it wants the government, banks and local authorities to give small firms a financial breathing space to take account of their lost business.
It is asking HM Revenue & Customs (HMRC) to extend the Time to Pay scheme. Under Time to Pay, firms can delay their tax payments.
The FSB says its members are typically given a six-month extension, and it would like this to be extended to seven. Regarding banks, the FSB is asking them to allow small firms to delay loan repayments and extend business overdrafts.
The FSB also wants councils to grant hardship relief funds and temporarily reduce business rate bills for those small companies in financial difficulty.
Increased overheads and falling trade
John Walker, the Federation of Small Businesses' national chairman, said: "Small businesses were banking on a good Christmas to make up for a bad year and the prospect of more bad news in 2011.
"Many shops and restaurants have taken on additional seasonal staff to cope with the anticipated demand of the Christmas season, but last weekend saw a drop in footfall of up to 30%, leaving businesses with increased overheads and falling trade."
Mr Walker added that without action, there could be "a wave of bankruptcies and shop closures in 2011", especially after factoring in VAT rising to 20% from 17.5% on 4 January.
Royal Bank of Scotland, which owns NatWest, said it would respond directly to the FSB's call for help.
Peter Ibbetson, chairman for small business at NatWest and RBS, said: "Cashflow is critical for small businesses at Christmas, so severe weather can hit their balance sheets hard.
"We're offering to help by extending overdrafts, offering loan repayment holidays or finance to replace any damaged assets."
James Falla of beatmydebt.com welcomed the bank's reaction. "This is a very positive step from RBS and I only hope that other banks follow suit. Many small businesses are struggling to survive as it is. The bad weather has made things even more difficult. When your business is surviving on a knife edge, any small disruption can be critical and result in the business's closure" he said.
"If you are struggling financially, there are solutions for sole traders and small companies which do not involve borrowing more. It is important to get advice and help as soon as possible as and IVA or CVA will be far more effective if applied early" Falla added.
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Source: BBC News