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The Business Magazine July 2024
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My SME business is in trouble – what help is available to me?

What help is available to SMEs facing financial difficulty
SMEs business owner man with tax documents and tax calculations by his office calculator.
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SMEs business owner man with tax documents and tax calculations by his office calculator.

With so many SMEs experiencing financial distress, there’s a growing threat of mass insolvencies in the UK.

The global pandemic aftermath, escalating costs, and rising inflation are creating a perfect storm of serious cash flow issues in many industries.

There are various schemes and rescue programmes available, however, to help you regain your financial footing. So if your SME business is experiencing difficulty, what support might be accessible to you?

Find our more about Begbies Traynor corporate insolvency support >>

More time to pay your tax arrears

HMRC runs a Time to Pay (TTP) scheme that offers a breathing space to pay off tax arrears. It covers all types of business tax, and you could be eligible for 12 months or more extra time to pay.

You’d need to keep your current tax liabilities up-to-date, but once a Time to Pay arrangement is established, penalties aren’t applied to the debt, although interest still accrues.

HMRC require a strong and persuasive business case to be presented in order for them to sanction a TTP, including details of why your business has fallen behind with its tax payments and how you intend to repay the new instalment plan.

READ MORE: How can SMEs prepare for an economic downturn?

Flexibility with Bounce Back Loan repayments

The government has introduced an extension to the Bounce Back Loan Scheme (BBLS), called Pay As You Grow (PAYG). It offers valuable flexibility that can help you avoid default:

The term of your loan can be extended from six years to 10 years

You’re able to take a payment break of up to six months

You can make interest only payments for six months (up to three times during the loan term)

Formal insolvency support for struggling SMEs

A robust business rescue regime exists in the UK, which helps businesses facing severe financial decline.

READ MORE: Warning of "wave of insolvencies" as inflation begins to bite

It includes:

Company Voluntary Arrangement (CVA)

A Company Voluntary Arrangement, or CVA, may be suitable if you’re able to anticipate your cash flow and turnover relatively reliably. It’s a formal arrangement that legally binds all parties, and typically lasts between one and five years.

An important element of a CVA is that creditors cannot add interest or charges to their debts. This provides a clearer picture for the future of your business if it can trade its way out of difficulty.

Company administration and ‘pre pack’

Although company administration is a rescue measure often used by larger companies, it may also be suitable for your SME business. When a company enters administration an eight-week moratorium begins, which legally prevents creditors from exerting pressure on the business.

This time period allows the administrator to assess the company’s difficulties without distraction, and plan a route out of administration. The exit route could involve a CVA, for instance, or in some circumstances a ‘pre pack’ administration may be appropriate.

This involves quickly selling the business’ underlying assets and forming a new company. As a director you’re able to purchase these assets, which are professionally valued, if you have sufficient personal funds available.

Creditors’ Voluntary Liquidation (CVL)

If rescue isn’t possible and the business has to close down, Creditors’ Voluntary Liquidation (CVL) ensures the closure is conducted according to statutory process. This reduces your likelihood of facing wrongful trading allegations.

As the director of a limited company you may also be eligible to claim director redundancy by following the CVL route, which could help towards the cost of the process or support your own personal finances.

In all cases and scenarios, obtaining professional help is important so that you take the right steps. Seeking assistance at an early stage also ensures that as many options as possible remain open to you.


Stephen Emerson is the Managing Editor of The Business Magazine and is responsible for the publication's print publications and online properties including the newly launched Biz News websites in Hampshire and Dorset.

Stephen has been a journalist for 20 years and has worked at local, regional and national publications and led a team which made The Scotsman website one of the fastest growing news sites in the UK with over eight million monthly users.

He has a keen interest in technology, property and corporate finance and telling the stories of the people behind the successful firms in these sectors.

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