Small businesses have a crucial role to play in the transition to a low-carbon economy. However, decarbonisation-focused development comes at a cost – something made clear in the Autumn Statement. So, how can these firms afford to invest?

How affordability is proving a barrier to going green

Small firms are critical to achieving net-zero goals, not least given the size of the sector and its contribution to the national economy. Progress is being made, with more and more companies adopting greener policies and practices, but there is pressure on the sector to up the pace of development. One barrier to this is cost.

While steps such as increasing recycling and reducing the use of single-use plastic are relatively straightforward to take, more wide-ranging changes, such as switching to electric vehicles and remodelling supply chains, take much more effort and investment.

Tax hikes and poor infrastructure causing firms to go slow

The role of cost was underlined in the recent Autumn Statement. The logistics sector has roundly criticised the Chancellor’s decision to remove the vehicle exercise duty relief on vans, which will increase operating costs for companies. At the same time, the move to increase business rates for warehouses has also come in for criticism, with large distribution warehouses set to be hit with a 27% rise in their bills.

Returning to the topic of electric vehicles, the onus still appears to be on companies to pay for the installation of their own charging infrastructure. According to a report from Zurich UK, there is only one public charge point for every 56 small businesses. It also highlights a postcode lottery in terms of the availability of charging points. These are clear barriers to decarbonisation.

Net-zero ambitions and how alternative finance can help

The push for more urgent action on climate changes comes at a difficult time for small businesses, not least given the health of the economy. However, action is a must. This state of affairs underlines the need for firms to have the right planning in place. Part of this is ensuring access to capital. This is where the services of alternative lenders 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.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth. Notably, alternative lending has played a prominent role in the government’s headline emergency support schemes, including the Recovery Loan Scheme. This profile has helped cement the reputation of alternative finance in the business sector.

Decarbonisation planning and small business finance options

Against a backdrop of possible long-term recession and questionable government policymaking, rolling out meaningful net-zero planning holds many challenges for small firms. For companies to successfully develop such strategies in the current climate, it is vital that they are aware of all available finance options, including 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.