As cyber-threats to SMEs continue to grow, yet another report has flagged how poorly protected these firms are against cyber-attacks. What’s causing the inaction and what’s the fix?

According to new research from JumpCloud, almost half of IT teams at SMEs believe their companies are unprepared for cyber-threats. This follows on from news that over 30% of businesses reported a cyber-threat in 2023, with firms with fewer than 10 employees seeing a significant rise in cyber-attacks in recent years.

A form of cyber-attack that is becoming increasingly common in 2024 is cyber-extortion – the number of victims has increased by over 75%, with small businesses four times more likely to be targeted than larger firms. Depending on the size of the company, ransom demands can range from four- to six-figure sums. The hijacking of social media accounts is one way in which cyber-criminals are targeting small firms – they demand a cash sum to regain access.

Data from Kaspersky paints a similar picture, with the number of SMEs reporting a cyber-attack rising by 5% in Q1 2024. Notably. trojan attacks increased significantly, with over 2,400 firms experiencing a malware attack during the period, an increase of 7% over the same period in 2023.

Funding cyber-security and how alternative lenders can help

The threat posed to SMEs by cyber-attacks continues to grow but many firms remain hesitant about investing in strengthening their cyber-security systems. Why?

The answer is simple – cost. Despite growing optimism in the SME sector, market conditions remain hugely challenging and the legacy of prolonged economic malaise is weighing heavy on firms. Finding the money to beef up cyber-defences while safeguarding cash flow is far from easy.

New figures from data insurer CFC underline the spending involved. According to the firm, the average monthly cost of a full-range of cyber-security measures for SMEs is almost £5,000. This puts the annual cost at nearly £60,000. While the costs for smaller businesses won’t be as high, the outlay is clearly substantial.

How can firms overcome this cost barrier? 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. Notably, the new Growth Guarantee Scheme will provide a wide range of finance facilities to smaller firms, including asset finance, invoice finance and asset-based lending. This is further proof that alternative lenders are increasing filling the small business funding gap.

Small firm finance options for cyber-security investment

That SMEs, and in particular smaller firms, are proving hesitant in terms of cyber-security investment is hardly surprising given the economic conditions that they’ve had to ensure in recent years. But the threat is growing ever stronger.

As such, it is essential that firms find the resources to better protect themselves against cyber-attacks such as cyber-extortion. This is why it is vital that owners and directors 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.