When it comes to switching to electric vehicles, the message from small businesses remains the same – we want to but there’s a problem. Take-up continues to be subdued and cost is a major barrier. How can firms balance the desire to invest with safeguarding cash flow?

What are the EV push-and-pull factors for small firms?

The small business position on electric vehicles has changed little in recent years – there is significant support for such a move but at the same time, adoption rates remain much lower than they should be. A shift to cleaner vehicles is taking place but the pace is widely perceived as too slow. One of the reasons then and now is the price tag attached to implementation of such a strategy.

New research from Confused.com highlights the issue. According to the study, 90% of small business owners are open to switching to electric vehicles, with environmental benefits, lower running costs and financial incentives the leading drivers of such sentiment. However, the survey also found that key barriers remain to rolling out such a plan. Over a quarter stated that the costs involved, including those related to maintenance, could hold them back, alongside concerns relating to charging time and charging infrastructure.

Interestingly, the findings of small businesses on electric vehicles come despite government moves to further incentivise such a switch. In February, the government announced the extension of the of the Plug-in-van grant for another year, while removing the requirement for additional training for zero-emission vans (but not for petrol or diesel equivalents). Both steps are part of multi-billion pound scheme to help businesses move to electric vehicles.

Funding EV investment and how alternative finance can help

The ongoing reticence to adopt electric vehicles despite increased efforts by the government to encourage a switch underlines the level of continued uncertainty around cost. And this is hardly surprising given the market headwinds and financial pressure small firms have had to endure.

But there are clear benefits to accessed from changing to cleaner vehicles, as well as the need to help achieve net zero targets (despite the increased doubt around them). Businesses have to find a way to invest while managing the impact of cost on cash flow.

This is where alternative finance can help.

As the first quarter of 2025 comes to a close, small business lending from traditional sources remains subdued, with 65% more SMEs experiencing difficulty in accessing finance from high-street banks. As a result, alternative lenders have become increasingly embedded in the small business finance landscape.

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. 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, the Growth Guarantee Scheme is providing 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 adopting electric vehicles

The imperative for smaller firms to accelerate the adoption of electric vehicles is clear, as are the benefits. To realise this goal, the obstacle of cost needs to be overcome. With the impact of changes to government policy remaining uncertain, businesses have to find a way to balance investment with safeguarding cash flow. This is why it is important that key-decision makers 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.