Last month we reported that there are an estimated 146,000 zombie businesses in the UK, firms that are barely staying afloat in the current economic climate, but managing to limp on while interest rates are low.
Now the Institute for Turnaround (IfT) has taken a closer look at the figures and found that as many as 50,000 companies are “beyond hope”. While others might be able to restructure their debts and business processes to return them to health in the long-run, this group are barely able to repay the interest on their debts, never mind any of the capital.
Christine Elliott, chief executive at IfT, told City A.M.: “Between 25 and 30 per cent of these firms are beyond hope, and will fail when interest rates rise.
“A lot of oversupply built up in industries like shipping and retail, and low interest rates have just postponed the inevitable – the recession still has to work its way through these sectors.”
This has hit companies big and small, putting thousands of jobs at risks when rates start to creep up again as the economy returns to growth and painting a poor picture of the UK economy. Fortunately, there are enough entrepreneurs and business buyers out there with the vision to turn things around.
Ms Elliott showed a glimmer of positivity for some of the companies suggesting that “if they restructure now, perhaps ten per cent of these zombie firms could turn out to be stars”.
Keeping rates low indefinitely might keep some companies afloat but it will do so to the detriment of others. Strong businesses need the right conditions for growth and unfortunately this growth will come with some sacrifice. Zombie business owners with sense and vision will take stock of their company as soon as possible and if necessary, put the company on the market to give it a chance at resurrection at the hands of a buyer with more cash to hand or a stronger strategy for the current climate.
If you're considering rescuing one of these companies check out our top tips for a business turnaround. 
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