All eyes may be on the future, with the small business sector sales on the rise, but the past is proving hard to shake for firms, which are still having to manage high energy costs. As they try to plan for growth, how can businesses pay the sky-high bills?

Energy bills are making the news again thanks to a report from Cornwall Insight that has forecast that costs are set to be 70% higher in 2025 compared to before the energy crisis. What this means for small firms such as independent retailers, pubs or restaurants, is an energy bill £5,000 higher than in 2021.

Looking ahead, according to the study, the average annual small business electricity bill will be £13,264 from April next year, compared to just under £8,000 before the energy crisis. For firms that are desperate for an end to austerity and better market conditions, having to manage these costs is a clear impediment to development.

The government has subsidized business energy costs in the past but the last support package ended in 2023. Whether a new one is forthcoming remains to be seen – recent commentary around the public finances deficit is hardly encouraging. However, there is one possible solution on the table in the form of the British Energy Bill, which would see the creation of a publicly-owned company that would co-invest £8 billion in green technologies.

Managing energy costs and how alternative lenders can help

High energy bills are weighing heavy on small businesses and pose a potential threat to development as the market slowly turns around. But managing cash flow and energy costs is essential to maintaining forward momentum – and 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 business finance options for paying energy bills

For all the positivity around the acceleration in small business sector sales and profits in Q2, rising energy bills remain a significant issue for firms – one big enough to somewhat temper the current optimism.

Nevertheless, for businesses to be able to ride the wave of growth that the sector hopes will materialise, they will need to manage the impact of energy bills on cashflow. This is why it is vital that firms 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 Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.