How the government could assist struggling SMEs
Struggling small businesses that are capable of surviving could get their basic bills covered by government funding as they attempt to recover.
The extra lifeline through a government guarantee would mean these firms still have access to essential services during business rescue talks or procedures.
Water, gas and electricity supplies would be covered as would essential technology services, according to business minister Jo Swinson.
This would prevent suppliers from cutting off services or boosting charges at times when firms are focused on securing their future.
Under the plans, suppliers will be guaranteed payment ahead of other creditors that are providing services while they can ask for guarantees of payment from insolvency practitioners too.
The Enterprise and Regulatory Reform Act has already been introduced to prevent suppliers from stopping essential services when a company enters administration, but more measures are required according to the government.
IT suppliers were not on the original list to be safeguarded but they are now also covered while utility suppliers will now have their own sets of safeguards.
They can terminate business should supplies remain unpaid for more than 28 days following insolvency, providing a certain level of protection.
Provisions also exist that are seeking to ensure that suppliers receive clear clarification from insolvency practitioners relating to when they can expect payment.
Suppliers facing difficulties as a result of any unpaid contracts will be able to apply to court to cancel those contracts.
The rulings could potentially aid many small businesses when they come into force in October, while rescuing companies from insolvency boosts both the jobs market and the potential for payment to those who are owed.
Should the rulings work as anticipated, insolvency practitioners should be able to assist creditors by helping to get as much money back as possible.
Coupled with saved jobs and the continual trading of the firms in question, the proposals could benefit many different parties.
By Phil Smith