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Electric fleets: how SMEs can afford the switch

Amid all the uncertainty, and as difficult as it is for some, for SMEs to survive into the post-Covid era, they need to plan for the future. Part of this planning is the switch to electric fleets. The big question is: how can firms afford it?

The desire to switch to electric fleets among small businesses is clear. For some, the move is already under way and, for a great deal more, embracing greener vehicle technology is something earmarked for the near future.

According to a new study from Cambridge & Counties Bank, almost a quarter of SMEs have started to make the switch to electric vehicles, while nearly a half believe that this change should be a priority. Overall, results from the survey show that almost all SMEs believe that the switch should happen as soon as possible.

Why more and more SMEs are embracing electric vehicles

The demand for electric vehicles, both hybrid and fully electric, is significant and has grown notably over the last year, driven by a number of factors. One of the most prominent of these is the government’s sustainability goals: a ban on sales of new petrol and diesel cars and vans will come into force by 2030, a full decade earlier than previously planned.

Another key factor is cost. There are a number of tax breaks available for operating electric vehicles, including exemption from vehicle excise duty and low-emission-zone charges. For employees, the switch from conventional cars means exemption from benefit-in-kind income tax.

And then there is the role that switching to electric cars and vans has in helping firms achieve their sustainability goals. In light of the growing focus on climate change, asserting and displaying green credentials are becoming increasingly important in the business world, and the greater use of electric vehicles is a key part of this drive for responsible development.

How SMEs can find the capital to invest in electric fleets

The benefits of switching to an electric fleet are clear, but the move involves significant investment, and, at the moment, freeing up capital for such evolution is very difficult. Yet, at the same time, SMEs can’t afford to drag their heels in this area.

So, how can business owners afford the switch to electric vehicles? It’s important that decision makers are aware of all the finance options available to them, from the government’s emergency loan schemes to the services of alternative lenders.

Switching to EVs and how alternative finance can help

With regard to alternative lenders, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the coronavirus pandemic, alternative finance facilities such as invoice finance, asset finance, peer-to-peer lending and crowdfunding are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more personalised approach to lending, are helping small businesses survive and target regrowth. Notably, alternative lending is playing a prominent role in the government emergency support schemes, in particular the Coronavirus Business Interruption Loan Scheme, which is connecting firms and the self-employed with loan, invoice finance and asset finance facilities. This profile is helping cement the reputation of alternative finance in the business sector.

What SMEs need to know about funding options

The transition to electric vehicles is under way and the SME sector is clearly on board. But it is important that intention becomes investment. Failure to do so could be costly. However, investing isn’t easy right now. This is why it’s vital that business owners have knowledge of all the funding options available to them, including alternative finance.

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

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