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The diesel dilemma: how SMEs can fund a vehicle fleet overhaul

Diesel has gone from hero to zero in a blink of an eye and this change is causing small business owners a big headache. How can they afford to overhaul their vehicle fleets? Alternative finance is part of the solution.

Diesel has copped a lot of flak, not least in terms of its effect on human health, and as a result, companies that run diesel vehicles and employees that drive them face higher road tax, new emission charges and larger parking fees. Furthermore, from April, diesel drivers will see their benefit-in-kind supplement rise by 1% if their vehicle does not meet the Real Driving Emissions tests introduced last September.

As ever, the truth about diesel isn’t black and white. While older diesel vehicles perhaps deserve the bad reputation, newer ones largely don’t. Nevertheless, small business owners are faced with having to meet new emissions standards and overhaul vehicle fleets. With diesel vehicles being demonised, SMEs are being encouraged to switch to more eco-friendly petrol or electric vehicles.

There is a clear and significant cost to this reorganisation, and it couldn’t come at a worse time for many small businesses. The burden of policy and non-policy costs is already weighing heavy as Brexit-borne uncertainty continues to hamper market performance. As such, the need to overhaul vehicle fleets threatens to stretch margins to breaking point.

So how can SMEs manage the cost? Alternative finance has a role to play. Capital is required for investment in new vehicles and to safeguard cashflow. To access this cash, small businesses are increasingly using the likes of invoice finance, peer-to-peer lending and crowdfunding.

This is how an SME in Sussex used peer-to-peer lending, through a commercial finance broker in Worthing that specialises in alternative finance, to raise £20,000 for new equipment.

Indeed, alternative finance is proving a lifeline for many small businesses, with the accessibility, affordability and flexibility of invoice finance, peer-to-peer lending and crowdfunding offering a timely and much-needed antidote to the continued caution being displayed by traditional lenders with regard to SME funding.

It is important that businesses prioritise environmental and social responsibility, and develop their operations to minimise their impact on the planet. However, this evolution comes with a cost and it is smaller businesses that are most vulnerable to these demands. Alternative finance can help these firms to meet these costs and maintain their forward momentum.

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

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