The Government and the banks have been urged to lend their support to firms hit hard by the severe winter weather.
The Federation of Small Businesses (FSB) said that the big freeze has cost the economy between £600 million and £1 billion a day and that action is required to make sure that firms are able to stay afloat over Christmas and the New Year.
Given the mauling that business confidence has taken, the imminent VAT rise and the effects of the bad weather, the FSB warned that any small enterprises may struggle to survive in the early part of 2011.
The FSB wants HM Revenue and Customs (HMRC) to extend its Time to Pay scheme to allow small businesses time to recoup lost takings in order to have the cash-flow to be able to pay their taxes.
Landlords, especially local councils, should push back rent reviews due in the New Year. Local authorities should also temporarily reduce business rate bills for those businesses in financial difficulty, the FSB added.
Banks, utilities and insurers can play their part too, offering hard-pressed small businesses some breathing space.
John Walker, national chairman of the FSB, commented: “Small businesses were banking on a good Christmas to make up for a bad year and the prospect of more bad news in 2011.
“The last thing this Government needs is a wave of bankruptcies and shop closures in 2011, but small firms will find it very difficult to bounce back in the New Year when VAT increases to 20 per cent and the spending cuts start to bite.
“We need to see a co-ordinated effort from Government, banks, local authorities and landlords to give small businesses some breathing space to recover in the New Year.”