Bankruptcy could be the future for nearly half a million sole traders in the UK over the next year, new analysis of public business data suggests.
Sales have fallen for nearly 1.3m sole trader businesses, with 19 per cent reporting struggles alongside a lack of savings and revenues to meet their needs, the analysis found.
“Sole traders are suffering more than larger businesses. We need to recognise that if they fail, they will be likely to add to the unemployed statistics and become the potential subject of personal insolvencies,” Philip King, Tide’s cash-flow expert and former small business commissioner, said.
King said more than 34 per cent of sole traders have found it hard to receive finance, considering it “no surprise that so many fail to grow.”
More needs to be done to help small businesses become more aware of alternative finance options, King said.
“I’m not advocating banks should lend irresponsibly, but we need to look at how we can target finance at these tiny businesses and – equally importantly – consider how we can educate them in the various forms of finance available beyond the traditional overdraft, credit cards, or friends and family sources to which they normally turn,” he added.
Demand elsewhere for “new finance” has levelled in the past year, with the total number of loan approval and overdrafts experiencing a slight drop and gross lending being 12 per cent less than the previous six month period.