Small firms are calling for radical steps from Chancellor Rishi Sunak as they demand the "most ambitious Budget in modern history".

It comes as SMEs continue to struggle amid the pandemic and claims one in five are overlooked by existing support from the government.

Research from the Federation of Small Businesses (FSB) reveals one million small firms across the UK are being left out of support measures, including those in supply chains saddled with rents and rising business rates.

The FSB says the figures "show shortcomings of sector-based support", with analysis indicating 56% of furloughed staff work outside of retail, leisure and hospitality.

It says firms that do not fit the definition for those industries, such as suppliers to pubs, hotels and restaurants - are only entitle to around 10% of support grants.

Now it is calling for the extension of business rates relief and cash grants as well as support for suppliers, directors and the newly self-employed; calls for incentives to bring workers back from furlough before the job retention scheme ends and renewed efforts to tackle a late payment crisis exacerbated by the string of national and local lockdowns.

The Budget is set to be delivered in the Commons on Wednesday, March 3.

Alison Parmar, FSB development manager in Kent and Medway, echoed comments made by its national chairman Mike Cherry: "The Chancellor’s plan for jobs will only succeed with the right plan for businesses.

"Firms need help to bring furloughed workers back in the near-term alongside long-term measures to help them manage the ongoing impact of lockdowns.

“While the government rightly moved at pace last spring to deploy business support, we can now see the shortcomings of a sector and property-based approach.

"Small firms which sell to other businesses outnumber those which sell to consumers three to one – thousands don’t have a commercial premises or neatly fit the definitions of retail, leisure and hospitality. Too many have been left out of support measures as a result.

“We urgently need to see support measures extended to the hidden heroes within our supply chains who tirelessly drive our economy forward. It’s not too late to bring those left out into the fold, but the Chancellor needs to act fast.

“Equally, the worsening of our late payment crisis will impact small firms for many months to come – a lot firms taking on work now will not be paid until the summer, if at all. The Chancellor should use this Budget as an opportunity to show real leadership on this front.

“Last year we suffered the biggest GDP drop in modern history. We now need the most ambitious, pro-business Budget in modern history to reverse the damage.”

The FSB survey quizzed more than 1,000 small business owners and found one in five (22%) state they have received no financial help at all from the UK government since the start of the Covid pandemic. A separate study by the group shows that only half (51%) have been able to access a cash grant and just 5% have received any discretionary help from their local authority.

It also revealed the burden placed on small firms by business rates is growing, with one in three (34%) seeing their bill rise over the past five years and one in ten saying their bill “has increased by a lot”. Fewer than one in ten (8%) say their bill has reduced in size.

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