Businesses, like individuals, can suffer from too much debt and this is often exacerbated by the lack of access to finance.

A number of factors, such as high borrowing, high overheads, onerous credit terms, variable costs and bad debts, can lead to significant cash flow challenges for small businesses. Once creditors are chasing for payment the small business owner(s) has two options:

  • try to save the business while attempting to settle outstanding accounts,
  • or allow the business to fail by implementing an exit strategy that minimises the financial consequences.

The Debt Arrangement Scheme (Scotland) Amendment Regulations 2014 came into effect on 11 December 2014 providing the support and guidance to allow small businesses to fulfil their obligations to creditors and continue to trade: a win win scenario for the economy.

The Business DAS has limitations in terms of what businesses can apply and it defines debtors as being:

  • a legal person
  • a partnership
  • a limited partnership within the meaning of the Limited Partnerships Act 1907(7)
  • a corporate body other than a company registered under the Companies Act 2006(8)
  • a trust
  • an unincorporated body of persons

Limited companies and LLP’s do not qualify for the Business DAS.