Despite the headline data hacks and steady stream of advice and warnings, the threat to small businesses from cyberattacks continues to grow. Effective protection requires investment and alternative finance can help.

New figures from the Federation of Small Businesses (FSB) show that more than a million small firms suffered a cyber-attack in the two years to January 2019, costing the small business sector a whopping $4.5 billion. The insurance and risk company Gallagher puts the cost even higher, at £8.8 billion, with the average cost of an attack at £6,400. The leading form of attack is phishing, with malware, fraudulent payment requests and ransom-ware also frequently reported.

These cyberattacks pose a grave threat to small businesses. The Gallagher study also reported that almost a quarter of the SMEs that it polled said that they would survive for four weeks or less if a cyber-attack left them unable to trade. This means that almost 60,000 are dangerously exposed to the work of cyber-criminals.

Worryingly, small businesses appear to be struggling to put effective safeguards in place to protect against cyber-attacks. According to the Association of British Insurers, only 11% of businesses have a specific cyber insurance policy in place. Furthermore, the FSB reports that 35% of small businesses do not have security software installed and over 50% do not have a strict password policy, while 40% do not regularly update software and a similar amount do not back up data and IT systems.

So, what is causing hesitancy in the small business community when it comes to cyber-security systems? Cost has to be a major factor. Reviewing and upgrading systems comes with a significant price tag and against the backdrop numerous other policy and non-policy costs and a downbeat marketplace, it comes as no surprise that firms are finding it difficult to increase their spending.

But alternative finance can help.

In the wake of prolonged caution from traditional lenders, a position that Brexit is helping to entrench, alternative finance facilities such as invoice finance, asset finance, peer-to-peer lending and crowdfunding are proving a vital source of capital for small businesses, both for safeguarding cashflow and for essential investment, including in cyber-security.

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 the capital to invest in new equipment.

The danger posed by cyber-attacks continues to grow and while it is attacks on the likes of British Airways, the Marriot Group and Facebook that make the headlines, it is small businesses that are most vulnerable. To invest in effective protection, business owners 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.