The solution to the lack of workplace upskilling, which is proving detrimental to employees and employers, seems simple: invest in more staff training. However, this education comes with a significant price tag. Alternative finance can help small businesses afford the costs.

According to a new study by the Association of Accounting Technicians, the failure to invest sufficiently in developing staff knowledge and skills has created a skills ceiling that is costing lower-paid employees almost £12,000 a year and affecting business productivity and performance. The Association claims that spending more on upskilling will address these issues and generate a £125-billion economic boost for the country.

Notably, the call for more investment in upskilling comes at the same time as the government Apprenticeship Levy scheme has come in for some fresh criticism. Some of the largest contributors to the scheme are lobbying for significant reform, particularly with regard to how the money raised by the Levy can be spent.

According to new figures, less than 10% of the £2.2 billion raised through the Levy scheme in 2017-2018 was spent on new workplace training programmes, while the number of new apprenticeship starts fell by over a quarter compared to 2016-2017. Blame has been attributed to spending caps on individual apprenticeships and restrictions on the sharing of funds with smaller firms that do not pay the levy.

It remains to be seen whether any reform of the Levy will be forthcoming and if small businesses would benefit; while the government seems wedded to the current framework, a number of smaller businesses are due to trial the scheme later in 2019. Regardless of how the scheme progresses, it is clear that upskilling and training offer benefits. However, for small firms, cost is a major barrier, with investment particularly difficult in the current climate.

This is where alternative finance can help.

Traditional lenders have long adopted a position of caution towards small business lending and the impact of Brexit on the economy has served to reinforce this stance. As a result, alternative finance is redrawing the small business funding landscape, with invoice finance, asset finance, peer-to-peer lending and crowdfunding providing firms with access to capital for essential investment, including in staff training.

This is how a Sussex small business used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to invest in new resources.

Staff training and upskilling is an important strategy for small firms, not least because of its potential to improve performance and drive growth. For small business owners to realise this potential, they need to be aware of all the funding options available to them, including alternative finance.

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