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How SMEs can finance vital digital tech investment

Digitalisation and the adoption of digital technology is integral to the post-lockdown future of SMEs. However, the cost of such measures is prohibitive, in particular for smaller firms. So, how can they afford to invest?

One thing that the COVID-19 pandemic has made abundantly clear for small businesses is the role of digitalisation and digital tech. The market landscape has changed massively since the spring of 2020 and digital transformation has become a vital investment.

Notably, following the initial shift online, many small businesses now find themselves in a position of having to development this strategy further as it becomes clear that customer and consumer behaviours and expectations have undergone a near-permanent change.

However, embracing this trend – whether it is a case of expanding digital offerings and ecommerce facilities or a matter of digitalising more internal processes – is by no means easy for small businesses. And, unsurprisingly, cost is a major factor.

Why investing in digitalisation is a challenge for SMEs

According to a new survey from Gridfox, more than 90% of SMEs in the finance sector admitted that they can’t keep up with larger competitors because of restricted budgets. Nearly two thirds of the firms surveyed acknowledged that this hindered their ability to grow, while almost 60% claimed it had stopped them recruiting.

It is pretty safe to assume that the situation in the finance sector can be mapped to many more industries, in particular those that have been on the front line in terms of the impact of the pandemic. A lot of small firms are in challenging position.

However, investment in digitalisation and digital technology is necessary step; recovery and regrowth hinges on this type of development to a considerable degree. So, how can these firms raise the capital? Alternative finance can help.

How alternative finance can help SMEs secure investment capital

With regard to alternative finance, 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 and peer-to-peer lending are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery and regrowth.

Notably, alternative lending is playing a prominent role in the government’s new headline emergency support scheme, the Recovery Loan Scheme. Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

Investing in digital tech and SME finance options

In today’s marketplace, digitalisation and the adoption of digital technology are essential to business development and growth. For under-pressure SMEs, and in particular smaller firms, to be able to invest, it is crucial that they are aware of all the finance options available to them, from government emergency support schemes and the mainstream bank facilities to the services of alternative lenders.

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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