The survey followed claims made by the Organisation for Economic Cooperation and Development (OECD), which said the government will be forced to raise interest rates by the end of the year.

R3 surveyed 300 small businesses based on three different increases: 2%-3.5%, 3.5%-4% and 4%-5%. The results indicated that 18% of small businesses would become insolvent if the increase was between  4%-5%.

X1 sales director Tim Lance, said: If the government did raise rates, prices would have to go up, it is as simple as that. We’re a small business and if we didn’t raise prices then we would become insolvent. I don’t want to see rises happen, but only time will tell.

Steven Brown, director at Your Print Solution, added that an interest rates rise  was inevitable.

They have to, it will be tough, we’ve all got used to borrowing money at reduced rates. Will it affect the way we do business? Yes, we will need to get used to it all over again, he said.

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 under 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 insolvency.