Cyber-attacks are a growing threat to small businesses, but despite this increase in activity, small businesses are struggling to put the necessary data protection and cyber-security systems in place. Why? And what’s the answer?

Where is SME cyber-security falling short?

While cyber-attacks on big firms continue to make the headlines – BA, BBC and Boots have recently been hit by cyber-security breach linked to MOVEit Transfer software – it is small businesses that hackers are increasingly targeting.

Worryingly, according to 2023 Cyber Report from Censornet, the cyber-security readiness and resilience of small business have declined in the last year, with over 50% of companies stating that they need to improve their systems (compared to just over 40% in the previous year).

Notably, the study also found that only just over a third of businesses can block dangerous attachments from landing in employee email inboxes, while less than 30% can properly quarantine suspicious or malicious emails. Both figures represent a decline compared to last year.

Research from Hiscox paints a similar picture, showing that one small business is hacked every 19 seconds, with almost 80% of firms having experienced a cyber-attack in the last year. The data show that one of most common and damaging forms is ransomware attacks.

What are the risks of a data breach for SMEs?

The risks relating to failing to properly protect data and systems are significant. Firstly, there is financial loss, relating to ransoms payments in order to restore access to files and systems, the cost of repairing and upgrading systems, lost revenue and having to pay fines for breaching GDPR.

Then there’s the risk of losing intellectual property data, which has the potential to put a company’s very existence at risk, and reputational damage, with the loss of trust leading to a loss in customers and sales.

And, of course, small businesses are more vulnerable to these risks because they don’t have the same resources to protect and defend themselves as larger firms do. As a result, the impact of attacks can be far more catastrophic.

Better data protection and how alternative finance help

Why are small businesses are dragging their feet with it comes to data protection and cyber-security? One of main barriers to investment is cost.

This is hardly surprising given the current state of the market and the headwinds these companies are facing. Nevertheless, it is critical that businesses find the capital to put the right systems in place. This is where alternative finance can help.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in a funding climate characterised by prolonged caution from traditional lenders. Indeed, the issue has returned amid highly challenging post-Covid-19 market conditions, with bank loans to SMEs falling by £14 billion in the year to March 2023.

These alternative finance 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.

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.

Cyber-security future proofing and SME finance options

While it is hardly surprising that smaller firms are finding it difficult to increase investment in data protection and cyber-security, it’s a step that they have to take. The consequences of failing to do so can be dire. This is why it is important that business owners 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.