Almost 20,000 Scottish businesses collapsed last year due to the pandemic

The Federation of Small Businesses (FSB) has urged the Scottish Government to outline new measures to aid the recovery of local businesses in the budget next week, as figures showed that Scotland lost almost 20,000 small businesses during a single year of the Covid crisis.

The estimated number of Scottish businesses fell by 19,805 – a drop of 5.4% – according to the Businesses in Scotland statistics, between March 2020 and March 2021.

There are now 344,505 enterprises in Scotland, the smallest number since 2014, when there were 329,765 businesses.

The majority of those that collapsed were among the unregistered Scottish businesses – those not registered for VAT and or PAYE – accounting for 19,015 of the decline.

The FSB said that this trend implies that the crisis has been particularly difficult for the self-employed and new starter businesses.

However, Scotland also saw a decline in registered businesses over the same period, with 790 of these firms lost.

In a letter to Finance Secretary Kate Forbes about the budget, the FSB urged the Scottish Government to earmark funds for grants to help Scottish small businesses build their digital skills and reduce their environmental impact.

The organisations wants Holyrood to commit to another year of business rates relief for the businesses hit hardest by the crisis. It also asked the government to investigate a collective insurance scheme for the country’s self-employed, taking inspiration from similar initiatives on the continent.

Andrew McRae, FSB’s Scotland policy chair, said: “What we need to see from the Scottish Government this week are commitments to help Scotland’s small business community get back on its feet – that means help for the current crop of businesses, and efforts to encourage and support the next generation of people who want to set up on their own.

“It is critical that Ministers support debt-laden firms by keeping in place Covid rates-relief for smaller firms for another financial year, and we want to see new grant funding to help local firms build their digital capabilities and reduce their carbon emissions.

“Independent businesses and the self-employed are part of the fabric of our local communities, but they’ve been stretched to breaking point by this crisis; renewed help is urgently required from decision-makers in Edinburgh.”

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