With auto-enrolment deadlines to be met, concern is growing among SMEs about the impact on cashflow and investment capability. Alternative finance can help allay these fears.

All SMEs with a workforce of up to 249 employees must have a workplace pension scheme in place by April 2017 according to new pensions legislation (with the deadline for larger firms passing this month). According to a new survey by Censuswide, fulfilling these duties has prompted fears among businesses about the effect on their finances, in particular their ability to offer pay rises and bonuses, take on more staff and invest in development.

So, how can SMEs meet their auto-enrolment obligations and maintain the financial flexibility to grow as economic conditions improve? Alternative finance services such as invoice finance, peer-to-peer lending and crowdfunding have a key role to play. Traditional lenders are upping their efforts to restore SME confidence in their services – see Lloyds’ recent pledge to invest £1 billion over three years to aid 1,000 startups – but with businesses turning to alternative finance is increasing numbers, it is clear that the SME funding landscape has fundamentally changed.

Alternative finance is going from strength to strength, with providers giving SMEs the access and affordability that they’ve struggled to find elsewhere and with businesses fearful of the financial consequences of their auto-enrolment duties, the sector clearly has a central part to play in helping them manage this structural realignment.

And it’s not just SMEs planning alternative finance strategies. The government has announced that the British Business Bank, which has already tied itself to non-traditional lending, is seeking new SME investors from outside the big business lenders. The more 2015 progresses, the clearer the importance of alternative finance becomes.

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