The Government was urged yesterday to restore public confidence to boost the domestic economy.
The Small Firms Association (SFA) said many businesses remain under serious pressure and report a weak outlook for the next three months.
Avine McNally, assistant director, said while the future remains challenging, sensible policy decisions and strong political leadership could create a better and sustainable economic future.
"A key priority for the Government is to restore consumer confidence and adopt policies which will increase demand in the domestic economy and provide greater access to credit," she said.
"Many firms have taken various steps to realign their business to the current economic climate by meticulous analysis of their cost base. However, domestic demand remains weak and consumers remain frightened.
"Government must address this by providing clarity to consumers on the economic situation and in particular provide as early as possible the likely impact of the budgetary adjustments."
Ms McNally said access to credit remains a major challenge for small firms.
"The Government must swiftly deliver on their commitment to introduce a loan-guarantee scheme to small businesses," she added.
"There has to be a greater understanding in the banks of the environment in which small firms are trading."
Meanwhile, statistics revealed 971 companies went bust in the first seven months of the year - four every day - a 6pc rise on 2010.
Ken Fennell, of kavanaghfennell, who compiled the data, said construction companies accounted for more than a quarter of all insolvencies recorded.
There were 39 receivership appointments in July - up 105pc on the June figure of 19 - which included high-profile businesses Superquinn and McInerney Holdings.
Mr Fennell said: "We are not surprised by the continuing high levels of insolvencies, as weak consumer sentiment and the ongoing financial uncertainty in the euro zone continue to have an adverse effect on business.
"Banks and Nama are continuing to take enforcement action in an attempt to maximise recoveries and we believe this trend will continue over the next 12 to 18 months."
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