While the threat from cyberattacks to small businesses only grows in size, firms are still struggling to put the necessary safeguards in place. Cost is a major issue. What is the solution for cash-strapped smaller companies?

More and more big brands are falling victim to cybersecurity breaches – in recent months, MOVEit, T-Mobile and Yum! Brands have been the latest to suffer at the hands of cybercriminals. These cyberattacks usually make the headlines – but what doesn’t is the alarming rise in attacks on smaller businesses, for which the consequences can be much graver.

According to new research from IBM, data breaches are costing companies an average of £3.4 million, up 9% from 2020. The sectors incurring the most costs are financial services, the service industry and technology. For small businesses, recent data from Hiscox claims that UK small businesses are targeted with 65,000 cyberattacks every day, with around 7% successful.

Where small firm cybersecurity is lacking

It is clear that small businesses are facing an onslaught – not least because they are more vulnerable than larger firms, which have bigger budgets for cybersecurity. The fact that smaller firms are struggling to put in place a strong enough level of protection is an indicator of this imbalance.

Educating staff, providing training and appointing specialist personnel is part of the cybersecurity infrastructure that businesses need and according to a new report from the Department for Science, Innovation and Technology, half of firms have a cybersecurity gap that they are struggling to fill.

The report goes on to reveal that around 50% of companies do not have the personnel to carry out basic cybersecurity tasks, such as detecting firewalls or dealing with malware, while almost a third don’t have the staff to manage more advanced cybersecurity tasks, such as security breach analysis and forensic analysis.

Funding stronger cybersecurity and how alternative finance help

While awareness is a key issue that needs to be addressed further in terms of small business cybersecurity, the cost of upgrading systems, providing training and hiring specialist staff is perhaps the largest barrier to better protection.

The fact that smaller firms are proving reluctant to spend more in the current climate is not a surprise – with cashflow and capital resources under tremendous pressure as a result of government fiscal mis-management, Brexit and the war in Ukraine. However, businesses have to find the money to invest in better protection – a failure to do so could result in chaos and costs that are ultimately crippling. 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.

Beefing up cybersecurity and small firm finance options

As Q3 reaches its mid-point, the risks relating to cyberattacks for smaller firms continue to grow – as does the need for businesses to up investment in protection. Given the state of the market and pressure on cashflow, it is imperative that owners and directors are aware of all the finance options available, 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.