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How small businesses can afford the Brexit transition

Brexit is here and as the transition period begins, it is vital that small businesses are prepared for the fundamental changes ahead. However, many are not. The ability to manage any opportunities or obstacles that arise is essential. Alternative finance can help firms manage the costs.

According to a new YouGov survey, while over half of SME decision makers feel ready for Brexit, almost four in ten do not. The proportion that do not feel prepared is even higher among small businesses that conduct significant import activity.

That Brexit is causing uncertainty should come as no surprise, in particular in light of recent government statements about post-Brexit manufacturing regulations. An announcement saying there will be no alignment with EU manufacturing rules post-Brexit was swiftly followed by some frantic back-pedalling.

Depending on who you believe, Brexit Britain will either be a land of milk and honey or a dystopian wasteland. As ever, the truth probably lies somewhere in between. There are likely to unforeseen costs and unexpected opportunities. The point for small business owners is that they must be ready to manage the impact of the former and take the latter.

Being able to take both opportunities and obstacles in your stride requires meticulous and comprehensive financial planning, and at a time when accessing funding remains a challenge, owners need to be aware of all the option available to them, including alternative finance.

In the wake of extended caution from traditional lenders, the likes of invoice finance, asset finance, peer-to-peer lending and crowdfunding are redrawing the small business funding landscape. These facilities, which offer a more personalised approach to lending, are helping small businesses grow. They are providing them with access to capital, on an affordable and flexible basis, to help manage cash flow and for critical investment.

For example, according to the new UK Finance Business Finance Review, more than 40,000 businesses have turned to invoice finance products in recent years, and a decline in SME loan applications in Q4 2019 suggests that this number will continue to rise in 2020. In addition, this is how a Sussex small business used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to invest in new equipment.

The stalled Brexit process has been costly for small businesses, with some putting the bill at as much as £1 million per firm. As such, the appetite for less uncertainty and more growth is significant. Whatever happens over the next 11 months and beyond, when it comes to finance, small businesses need to be prepared and able to act decisively. This is where alternative finance can help.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.

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