As small businesses owners look ahead to 2022 and target recovery and regrowth, they must also now make plans to manage a rise in national insurance and the impact of this additional cost on cashflow and development.

From April next year, national insurance will increase by 1.25% for employees and employers. From 2023, it will become a separate tax. The monies raised will be used to fund health and social care reforms and the NHS.

While the need to invest in improving the country’s health and social care infrastructure and the NHS is clear, the decision to generate the capital through an increase in national insurance has already drawn fierce criticism from the small business sector and business leaders.

Managing in a new market, investing in new tech, repaying loans…

The announcement of the tax rise comes at a time when small businesses are fighting to find a way forward after weathering the effects of the pandemic and multiple lockdowns. The market landscape has changed dramatically, not least with digital tech taking on a much larger role, including in terms of e-commerce.

Then there’s the need to invest in upgrading cyber-security, providing greater employee wellbeing services and going greener. At the same time, the regulars bills, including the much-debated business rate tax, continue to come in.

Notably, in the near future there will be another payment invoice landing in the inbox for firms that have needed to make use of the government’s emergency support schemes. The government has made it clear that it expects repayment to begin sooner rather than later.

…and paying more tax: how will SMEs cope?

As such, looking ahead, 2022 promises to be another tough year for small businesses. And now it will include finding the means to meet a hike in national insurance contributions. So, how will these firms manage the impact on cashflow and continue to target regrowth?

The services of alternative lenders can help.

NI tax hike, protecting cashflow and how alternative lenders can help

With regard to alternative finance, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic, services such as invoice finance, asset finance and peer-to-peer lending, are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery and regrowth.

Furthermore, alternative lending is playing a prominent role in the government’s headline emergency support scheme, the Recovery Loan Scheme (open until the end of 2021). Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

Managing higher tax payments and SME finance options

The announcement of the rise in national insurance comes at a very difficult time for small businesses. If the outlook wasn’t tough enough, they now have yet another cost to manage. If they are to rise to the challenge, it is important that business owners are aware of all the financial options available to them, including alternative finance facilities.

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