Large businesses are helping the UK lead the way in terms of the adoption of alternative fuels, but SMEs are proving much slower to embrace the change. The price tag is a major factor. So how can these firms manage the cost of switching to low-emission vehicles? Alternative finance can help.

The new edition of the Arval Mobility Observatory has revealed that only 22% of firms with 10-99 employees have integrated hybrids, plug-ins hybrids or electric vehicles into their fleets. The ratio is even smaller for companies with fewer than 10 employees, at 5%. This is in sharp contrast to 78% of businesses with over 1,000 employees.

The difference in adoption rates isn’t surprising – larger organizations have more resources, more structured fleet strategies and more clearly defined corporate responsibility and sustainability targets to meet. However, as the UK’s status as a leader in the adoption of alternative fuels suggests, the opportunity for SMEs to invest in newer fleet vehicles and alternative fuels is there.

So, what is stopping SMEs integrating more low-emission vehicles into their fleets?

Cost has to be a major factor. Small businesses have to manage the financial implications of a raft of policy and non-policy costs, relating to the likes of auto-enrolment pension schemes, GDPR compliance, minimum wage reform, late payment, business rates and cybersecurity. At the same time, they are having to battle the impact of prolonged market weakness. As a result, raising capital for investment is far from straightforward.

There is where alternative finance can help.

In the wake of extended caution from traditional lenders, the likes of invoice finance, asset finance, peer-to-peer lending and crowdfunding are redrawing the small business funding landscape. These facilities, which offer a more personalised approach to lending, are helping small businesses grow. They are providing them with access to capital, on an affordable and flexible basis, to help manage cash flow and for essential investment.

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.

Big businesses are helping the UK set an example in terms of the adoption of alternative fuels and it is important that SMEs are also part of this pioneering trend, not least as these firms operate a significant number of company cars. As laws change and regulations tighten, SMEs will have to invest. To help them manage the costs, 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 Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.