Last week the Organisation for Economic Co-operation and Development claimed that the government will be forced to raise interest rates by the end of the year.

R3 carried out a survey of 300 small businesses based on three different outcomes - a rise between 2-3.5%, a rise between 3.5-4% and a 4-5% rise.

The results indicate that 18% of small businesses would become insolvent if the increase was between 4-5%.

Unsurprisingly lower increases will result in less of an impact, although it could still force a number of companies to close. According to the survey 12% of small businesses would become insolvent if the base rate rose by 3.5-4% and 7% would go if it rose by 2-3.5%.

R3 President Steven Law said: "Pressure will be keenly felt among highly geared businesses and an increase in the cost of finance either for working capital or to fund expansion are factors than can lead to corporate insolvency."