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How SMEs can survive auto-enrolment and the living wage

The costs of pensions auto-enrolment and the new national living wage pose a threat to small businesses. Alternative finance can help these companies survive.

SMEs are facing some significant costs in the short term relating to pensions auto-enrolment and the implementation of the new national living wage. The two schemes have obvious merits but they come at a price and, for smaller businesses, they are a significant financial burden. The pressure could increase further should the government decide to accelerate the living wage timetable or crackdown on freelancers’ tax relief relating to travel and subsistence.

Generating capital and maintaining cashflow have been major challenges for SMEs in recent years, not least as a result of cautious attitudes from traditional lenders. This reticence has helped propel alternative finance and services such as invoice finance, peer-to-peer lending and crowdfunding from the periphery of the market to its centre. And it is these services that can help SMEs manage these extra costs.

Alternative finance continues to be a lifeline for small businesses; however, if SMEs are going to thrive and help drive economic revitalisation, greater awareness of these services is vital. According to a new Federation of Small Businesses-backed study from GLI Finance and Cambridge University Centre for Alternative Finance, four banks still account for 80% of SME lending. It goes on to claim that if more isn’t done to improve awareness of alternative lending, there will be a £20 billion black hole in the economy by 2020.

Smaller businesses play an incredibly important role in the UK economy, so making sure that they aren’t overwhelmed by costs such as those relating to auto-enrolment and the living wage is essential. And that is why alternative finance, and educating business owners about it, is so important.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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