Only one fifth (21pc) of small businesses exposed to Brexit have prepared for the UK leaving without a deal.
A similar number said they have had to stockpile before the expected October 31 EU exit date, further tying up funds.
The FSB, which has 165,000 members with an average of seven employees, says that almost 40pc of small businesses would be badly affected by a no-deal departure.
Two thirds of small businesses say they cannot prepare because they don’t know exactly what to prepare for. Many small business owners complain they do not have enough sector-specific information over trading and tariffs, or what kind of Brexit will become law, to be able to plan.
Mike Cherry, FSB national chairman, has called on the Government to issue no-deal preparation vouchers worth up to £3,000 to cover planning costs.
Temporarily reducing VAT and National Insurance, uprating the £3,000 employment allowance, giving small firms more time to pay taxes, and extending the two-year “retailers” business rates discount of 33pc to a wider range of small businesses are other remedies mooted.
Cherry said: “As the risk of a chaotic no-deal Brexit on October 31 remains alive and kicking, it is worrying that many small firms have either not prepared or are finding that they can’t prepare.
“Ongoing uncertainty is to blame for preparations hitting the skids with the picture still not clear as to how the UK will leave the EU on October 31. Until we get clarity, small firms must prepare for the cliff edge where possible and make preparations for a no-deal Brexit.
“Preparing for this outcome is coming at a high price though with small firms being hit by an unstable pound and having to shell out money on a potential outcome that has been highly disruptive, remains uncertain and is unwanted. Government must use what little time is left before 31 October to provide small firms with the support they need to navigate the uncharted and turbulent waters of a no-deal Brexit.
Liverpool launches no-deal fund
Trying to help small businesses absorb the impact of no deal, Liverpool has established a £15m Brexit Resilience Fund.
The fund would only be available to small businesses that trade with the EU, or supply them, to help with temporary difficulties. These could include needing to pay for extra stock or covering late payment from EU customers, for example.
Businesses with more that 25pc of their turnover dependent on trade with the EU or in their supply chains, would be eligible for loans of up to £250,000 over a 12-month period.
Farmers face bankruptcy
Elsewhere, the country landowner association has warned that as many as one in four rural businesses could be left facing bankruptcy in a no-deal Brexit.
Farmers are especially vulnerable to a no-deal Brexit because tariffs of 40pc would be levied on meat exports, imports of cheap food could flood the market, and because farmers are right in the middle of making planting and breeding decisions which will carry them through into next year.
Tim Breitmeyer, president of the Country Land and Business Association, told the Guardian that farms and rural businesses are not financially strong enough to absorb the shock of no-deal.
The realities of new export tariffs, rising import costs, the crash in the value of the pound and difficulties in employing migrant labour were now sinking in, he said.