The Facebook data mining scandal is a stark reminder for SMEs of the importance of data protection. However, small firms are dragging their feet. Cost is a barrier to security and alternative finance can help.

According to the latest figures, a staggering 87 million Facebook users may have had their data improperly shared with Cambridge Analytica. The scandal has prompted users to download their Facebook data from the social networking site and many have been astonished at what they’ve found. Facebook’s share price has taken a hefty hit as a result.

The scandal sends a clear message about data protection and the dangers of having inadequate security measures in place, both to individuals and businesses. There has been a strong focus on cybersecurity in the first quarter of this year, not least in the run up to the introduction of the new General Data Protection Regulation (GDPR). There have also been many examples of the havoc a cyberattack can wreak.

Nevertheless, the small business sector has been slow to prioritise investment in cybersecurity. New data from the Federation of Small Businesses suggests that this picture remains largely unchanged. According this new research, over a third of small companies have yet to being preparing for the introduction of GDPR, while a further third are only at a very early stage of preparation.

Why the sluggish response? Cost has to be a major issue. Small businesses are already burdened with a raft of policy and non-policy costs, such as those relating to the pension auto-enrolment, the living wage, apprenticeships and business rates. At the same time, they are battling market conditions affected by Brexit-borne uncertainty.

But, as the Facebook data mining scandal shows, investment in data protection and cybersecurity shouldn’t be put to one side. So how can small businesses afford it? Alternative finance services such as peer-to-peer lending, invoice finance and crowdfunding can help them raise capital for investment in new equipment and for safeguarding cashflow. In the face of continued caution from traditional lenders, more and more small business owners are turning to these non-bank finance options.

This is how a small business in Sussex used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise £20,000 for new equipment.

These are challenging times for small businesses and accessing finance is critical to their ability to weather the storm. As such, it has never been so important for companies to make use of all the finance options available to them, including alternative finance.

To find out more about A&T Business Associates services, contact Tony on 01903 602211 or tony@atbusinessassociates.co.uk.