ESCALATING energy costs are going to put many SME firms under pressure of collapse, including leasing brokers, believes credit reference firm Red Flag Alert.
While residential energy is subject to the price cap, businesses have no such protection.
Speaking to the BBC today (07 September, 2022), Red Flag Alert chief economist Nicola Headlam said that larger, more energy intensive businesses with turnover in excess of £1m were at significant risk, while smaller businesses with sub-£1m turnover were also at risk of failure.
Red Flag Alert has calculated that businesses overall will need £100bn yearly to support their viability to ride the energy bill rise.
The implications here are twofold for leasing brokers.
First, the exposure to rising energy bills and how it will affect the bottom line of their brokerages. This comes on top of the additional financial stress of bulging order banks but lack of vehicles to deliver for payout.
And second, the risk that SME firms that are broker customers might disappear, along with a downturn in consumer demand.
Against this gloomy picture, the new Prime Minister, Liz Truss, is said to be preparing to borrow up to £100bn in order to shield homeowners and businesses from the worst of the energy rises.
Martin McTague, national chair of the Federation of Small Businesses (FSB), added:
“I congratulate Liz Truss and her team on a campaign that included small businesses, the self-employed and unleashing enterprise at its centre.
“The challenge now is to deliver action that is big and bold enough to match the scale of the crisis threatening the existence of many small firms, and the jobs, livelihoods and communities which depend upon them.
“Small firms, not protected by an energy price cap, are seeing bills soaring out of control. This is at a time of sky-high taxes, rampant inflation and supply chain disruption, creating a toxic mix which must be addressed urgently.
“Small businesses are crying out for a comprehensive response which cuts taxes, limits spiralling bills, and provides direct cash support for the smallest businesses.”
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
