New figures suggest that small businesses are struggling to raise capital for investment. With growth planning integral to surviving in 2023 and beyond, it is vital that these firms are able to fund development. So how can they afford it?

A new study from Together claims that millions in small business investment has been lost as a result of the economic chaos in 2022, with leading SMEs spending an average of £565,000 compared to an expected amount of £710,000.

According to the research, factors that are contributing to this drop include the rising cost of fuel, raw materials, labour and transportation, and problems with regard to recruiting and retraining talent as well as global supply chain disruption and tax rises.

While the slump in investment is far from surprising given the headwinds that firms have had to face in 2022, the news is still concerning, with this kind of spending integral to the performance of the small business sector and wider economy.

Accessing capital and how alternative lenders can help

Accessing funding has long posed challenges for the small business sector and market conditions in 2022 have made this even tougher. Yet, with development in areas such as decarbonisation, cybersecurity, staff wellbeing and digital tech to keep on top of, securing capital to safeguard cashflow and fund investment has never been so important. 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 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.

Notably, findings on preferred funding channels from the Together study underline the growing profile of alternative lenders. According to the research, almost a quarter of business leaders said that they will turn to asset finance to fund investment when economic conditions improve. Other popular facilities include development finance, commercial mortgages and angel investors.

Investment funding and small firm finance options

The economic uncertainty seen in 2022, and in particular the impact of the economic leadership witnessed in more recent months, is weighing heavy on the small business sector. And the prospect of a deep recession suggests that this burden is here to stay.

Surviving and thriving in 2023 and beyond will require astute planning, including that relating to accessing capital for investment. This is why business owners need to be 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.