Prolonged austerity and severe market headwinds have had many consequences for small businesses – they include highlighting the need to do more to look after owner and employee mental health. But how can cash-strapped firms afford it?

What is the mental health status of small business staff?

A new survey from Simply Business has underlined the impact of challenging economic conditions on small business staff. According to the study, almost half of SME owners have experienced mental health in the past year, significantly above the national average.

These findings paint a similar picture to the results of research from Indeed Flex that revealed that an incredible 92% of employees experienced stress or burnout in the workplace in 2023, double the number recorded for the previous year.

Notably, small business owners and staff are vulnerable to falling into position where they feel they can’t take time off, to reduce stress, deal with issues, etc., because of the role they have in the business and the perceived cost of them being absent.

Tellingly, a new study from Capital on Tap shows that only 14% of small business owners can afford to pay themselves when sick. Lack of finance extends to the imposing of limits on the taking of other benefits, beyond statutory sick pay, such as paternal leave.

These are bruising figures – the wellbeing of small businesses is highly important – both in terms of the people involved and with regard to the contribution these firms make to the overall economy. If sustained economic growth is to be achieved, small businesses have to be fit and functioning.

Workplace wellbeing funding and how alternative lenders can help

The good news is that the importance of staff mental health is being increasingly recognised on the scale need to achieve positive development, with more and more initiatives, policies and projects being put in place to provide this type of care.

However, as the results of the recent surveys suggest, more could be done, in particular in the small business sector. What’s proving a barrier to investment? Cost and the impact on cash flow is an issue. And this 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 firm finance options for safeguarding staff mental health

The focus on small business staff mental health continues to grow, but there is a feeling that the pace of progress could be accelerated, and this needs investment. Here is where it gets challenging for smaller firms. Safeguarding cash flow has rarely been harder. But with wellbeing so important to performance and growth, spending is important.

This is why it is vital that, with high street banks still cool on small business lending, 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.