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Why SMEs have to up cybersecurity spend and how to do it

New research shows a trend for SMEs downgrading their cybersecurity. Such a move is understandable given the pressure on cashflow but these firms need to do the opposite. The big question is, how can they afford it?

According to a new study from GlobalData, almost 30% of SMEs cancelled their business cyber insurance policies in 2021. The primary reasons was cost – with over a quarter of these firms believing the cover to be too expensive – while perhaps more alarmingly, nearly 40% cited a lack of concern with regard to being targeted as the reason.

These are worrying figures. While it is always cyber-attacks on large organisations that make the headlines, size does not matter when it comes to such crime. And cyber-criminals are increasingly targeting smaller businesses because these firms are more vulnerable, with weaker cyber-protection.

Why SME cyber-security is a hot topic in 2022

Notably, this vulnerability has been enhanced by the pandemic and the widespread switch to home-working, which continues to be a popular policy as restrictions are lifted and working conditions return increasingly to normal. At the same time, the war in Ukraine is increasing the incidence of cyber-crime.

On a general scale, the National Cyber Security Centre reported tackling more than 2.7 million online frauds in 2021, a fourfold increase on the number recorded for 2020, while a 2022 government report revealed that almost a third of businesses had experienced cyber security breaches or attacks at least once a week.

As such, small businesses need to invest in strengthening their cyber-security now more than ever. The failure to have adequate protection in place can be catastrophic. PCI Pal research found that over 41% of consumers would not return to a business post cyber-breach. Recovering from cyber-attacks, whether in terms of regenerating lost sales, paying ransoms or writing off losses, can be hugely damaging and potentially fatal.

Beefing up cyber-security and how alternative finance can help

The need for SMEs to wield strong cyber-security is clear, but at a time when these firms are facing unprecedented headwinds and pressure on cashflow, how can they afford to invest? In such circumstances, access to finance is critical and this is where alternative finance can help.

In the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic and amid challenging market conditions in 2022, services 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. Furthermore, alternative lending is playing a prominent role in the government’s headline emergency support scheme, the Recovery Loan Scheme (open until the end of June 2022). 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.

Affording better cyber-protection and smaller firm finance options

That proper cyber-protection is still out of reach for a significant amount of SMEs is a concern. Given the condition of the market, it is understandable that affordability is an issue, but it is important that firms overcome this challenge and put the systems in place that will help them keep going and target growth. To do so, it is essential that SMEs are aware of all the finance options available to them, including the services of alternative lenders.

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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