A third of small firms are considering redundancies while thousands fear they will never reopen as the Covid-19 crisis devastates the UK economy.
Roughly 40 per cent of small businesses have been forced to close their doors since the beginning of the coronavirus lockdown in March.
Of those that have closed, more than a third said they are not sure if they will ever reopen.
The grim figures, which were published by the Federation of Small Businesses (FSB), lay bare the scale of the damage caused by the virus.
More than a quarter of small businesses said they had failed to make or were struggling to make rent or mortgage payments due to the pandemic.
As a result, more than a third said they were considering redundancies or had already been forced to lay people off.
Employers have been granted some hope after chancellor Rishi Sunak yesterday announced that the job retention scheme will be extended until October.
The scheme will remain the same until the end of July, but from August to October there will be “greater flexibility”, such as supporting part-time workers and making employers share some of the costs.
The job retention scheme has been a key lifeline for small companies, with more than 70 per cent furloughing staff to help their business survive.
The vast majority of firms said the ability to partially furlough workers would benefit them as the economy begins to reopen.
“The government has stepped-up with a huge range of support for millions of small businesses and sole traders, from income support schemes, to cash grants, to help with accessing finance and business rates breaks,” said FSB chairman Mike Cherry.
“Policymakers now need to realise that the economy will not go from zero to a hundred overnight once we’re into the recovery phase. The crucial support that’s on offer needs to be kept under review, and adapted to reflect the new normal as we chart a course back to economic recovery.”
Aside from the furlough scheme, some small businesses have also been struggling with other government support.
Business owners have cited difficulties accessing grants linked to the payment of business rates and universal credit, while company directors remain excluded from support for the self-employed.
“The support measures that we’ve secured are helping the vast majority, but they’re not helping absolutely everyone,” Cherry added.
“Policymakers need to be in listening mode and prepared to help the most vulnerable over the challenging months ahead. No one should be left behind.”