The blues aren’t just for January it seems, at least for small businesses. This month, firms face an onslaught of changes that will put even more pressure on cashflow and capital. How can they ride out this storm?

The restructuring of the support with energy bills is the big news, with the introduction of the new Energy Bill Relief Scheme meaning a huge hike in costs for some small firms. However, at the same time, businesses are bracing themselves for the impact of an increase in corporation tax and the national living wage, and a reorganisation of business rates that could lead to higher bills.

For business already worried about increased running costs, weak consumer spending power, higher interest rates, the costs of hiring and retaining staff and accessing finance, the reduction in support and rising taxes and wages are tough pills to swallow.

New research lays bare small firm financial vulnerability

As such, it comes as little surprise to see both the Federation for Small Businesses and the British Chambers of Commerce issuing dire warnings about what lays ahead for the small business sector if more isn’t done to relieve the pressure on companies.

Tellingly, new research from Yell shows that almost one million SMEs have £1,000 or less in savings, with 45% of those interviewed for the study stating that saving is much less viable now compared to 2019.

In addition, a new survey from Bibby Financial Services shows that the average bad debt among SMEs has increased by a huge 61%, from £10,329 in 2022 to £16,641 today. According to the data, almost 30% of SMEs are struggling with bad debt in 2023.

Facing the April storm and how alternative finance can help

While the revelations relating to the state of small business savings and bad debt may be alarming, they aren’t a shock. The sector has battled unprecedented headwinds for a number of years, with little respite. Furthermore, there is little suggest any meaningful upturn in conditions in the short term.

However, small businesses are nothing if not resilient and as they integrate the reduction in energy bill support and the increase in taxes and wages into their planning, accessing finance will be integral. This is where the services of alternative lenders can help.

In the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic and amid challenging post-COVID-19 market conditions, services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses.

These facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth. Notably, alternative lending played a prominent role in the government’s headline emergency support schemes in 2022.

This profile has helped cement the reputation of alternative finance in the business sector, with a recent study showing that more than 50% of small businesses are looking to use finance to achieve growth in 2023.

Accessing finance and small firm capital options

At a time when many small firms are struggling to keep their heads above water, the deluge of increased costs in April is the last thing they need. If they are going to stay afloat, safeguard capital and cashflow and target much-needed growth, their ability to access finance is critical. This is why it is essential that businesses are aware of all the funding options available to them, including alternative finance facilities.

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