In face of increasingly severe headwinds and in the wake of an unsatisfactory Spring Statement, calls for an emergency Budget are growing. Easing the pressure on small business cashflow is a priority – what steps could be taken to achieve this goal?

The growing support from the small business sector for an emergency Budget in Q3 comes as little surprise. Energy, raw materials and labour costs are soaring, inflation has reached double digits and business confidence is tanking. And all this comes as firms are still trying to shake off two years of pandemic-forced hardship.

Notably, analysis of the Spring Statement that said that there were too few measures to address immediate small business concerns, with short-term help thin on the ground, is starting to look highly prescient.

How an emergency Budget could help small businesses

The economy is in a perilous position, with the Bank of England warning of recession, and the small business sector is fast approaching breaking point. Hence, the need for expedited support package from the government.

Those lobbying for the first emergency budget since 2010, including the British Chambers of Commerce, have outlined a number of measures that the government should take to help struggling businesses.

The steps include the reversal or delay of the national insurance reform that was introduced in April, cutting VAT on energy bills from 20% to 5%, a further increase in employment allowance and the re-introduction of free coronavirus testing for employers.

The government has yet resisted the calls for an emergency budget, and while a U-turn would hardly be a shock development, the ongoing delay in action keeps the pressure on small businesses to find their own solutions. The big question is, “what can they do?”

Managing rising costs and how alternative finance can help

Integral to managing the impact of rising costs and a flat economy on cashflow is access to finance and it is here that alternative finance can help.

In the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic and amid challenging market conditions in 2022, 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 June 2022). 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.

Safeguarding cashflow and small business finance options

While the pressure on the government to draw up an emergency Budget continues to grow, it remains to be seen whether it will take this step and provide small firms with the help that they desperately need. Given this uncertainty and increasingly gloomy economic forecasts, it is important that companies are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.