Small firms could need insolvency solicitors

Published on 14 Jun 2010 under category: legal

Small firms in the UK could be in need of insolvency solicitors if interest rates are raised, according to one industry body.

This week, the Organisation for Economic Co-operation and Development (OECD) urged the UK government to increase interest rates to 3.5 per cent.

However, many businesses still in recovery from the recession believe they could go under.

R3's latest survey found that more than one in ten (18 per cent) small businesses think they will become insolvent if the rate goes up to between four to five per cent.

Twelve per cent think they could be wound up if the base rate goes higher, to 3.5 per cent and four per cent.

A regional divide is also likely, with firms in the north-east more vulnerable to increases than their counterparts in the East Midlands.

On the findings of the poll, the president of R3 Steven Law said: "For businesses that are repaying bank loans and rely on consumer spend, an increase in interest rates would be a double blow.

"Pressure will be keenly felt among highly geared businesses, and an increase in the cost of finance either for working capital or to fund expansion are factors than can lead to corporate insolvency."

If you require advice on Insolvency and Bankruptcy please call us on +44 (0)20 7831 0101 and ask for Katherine Sillett.