The threat poses by cyber attacks to small firms continues to grow but new evidence shows that many these businesses remain reluctant to invest in strengthening protection. What’s behind the reluctance and what’s the solution to this problem?

How are small businesses being targeted by cyber-criminals?

The danger of cyber-attacks is hardly breaking news for businesses – the cost of cybercrime was put at whopping £30.5 billion in 2023, with the number of successful attacks rising by a staggering 40% over four years.

Notably, research from AAG revealed that nearly a third of businesses reported a cyber-attack in 2023, with the number rising to almost 60% for medium-sized businesses and around 70% for large companies.

However, perhaps the most alarming figures are those that relate to smaller firms. According to the Cyber Readiness Report from Hiscox, the percentage of cyber-attacks on small firms with fewer than 10 employees rose from 23% to 36% between 2020 and 2023.

Data from a new Censuswide survey underlines the challenge that small firms are facing. According to the study, over 73 million malware, phishing and bot attacks on small businesses were blocked in the last 12 months, with companies estimating that a successful attack could put them out of action for four days.

How are small firms responding to cyber-attack threat?

These figures should put small businesses on red alert. However, surprisingly, many of them aren’t.

A new survey from Cowbell showed that almost a third of chief executives at SMEs are confident that a cyber-attack would not put a freeze on their operations, while 10% saw no reason to beef up their cyber-security systems. Furthermore, and perhaps most insightful of all, the Cowbell research also revealed that over three quarters of SMEs do not maintain any in-house cyber security.

Funding cyber-protection and how alternative lenders can help

After digesting this news about the dangers of cyber-attacks and the reticence of small businesses to invest in better protection, the obvious question to ask is – why?

And the obvious answer is – cost. Small firms have borne the brunt of severe economic headwinds in recent years as global events and government financial mismanagement have wreaked havoc on markets. Therefore, it comes as little surprise to learn that firms are finding it hard to finance such spending.

But investment is critical. And 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 the current funding climate (with 65% more SMEs experiencing difficulty in accessing finance from high-street banks). 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.

This profile has helped cement the reputation of alternative finance in the business sector. According to the British Business Bank, it is alternative lenders that are increasing filling the small business funding gap, with asset finance alone rising by 7% to £23.5 billion in 2023. At the same time, a 2024 study shows that more and more SMEs are turning to alternative lenders to access larger-scale finance packages.

Small business finance options for cyber-security

The hesitation of small business with regard to strengthening cyber-security can’t be attributed to a lack of awareness – there have been too many headlines for that – but rather it is the price tag that is the issue.

However, the cost of failing to sufficiently protect a business from cyber-attacks can be far greater. This is why, with traditional lenders retreating from small business lending, it is important that owners and directors 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 Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.