The federal budget is expected to throw a lifeline to small businesses with permanent changes to bankruptcy rules.

Business owners would no longer be burdened with the huge cost of going through voluntary administration when they hit financial trouble.

Treasurer Josh Frydenberg told Ben Fordham businesses would be able to trade while insolvent.

“Right now, 60 per cent of businesses that go into the insolvency process don’t come out the other side.

“We are creating an opportunity for businesses who’ve done it really tough through COVID to be able to manage their own affairs, not see their assets eaten away in fees or lawyers and accountants, and have the best chance of surviving.”

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