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How small firms can protect cashflow and stay afloat

New research has highlighted just how many small firms are at risk of going under in 2023, a scenario that presents a major risk to the economy. Businesses need to safeguard cashflow and fund growth if they are going to survive. The question is, how can they do it?

The prospect of insolvency is a fear that many small firms have to live thanks to the impact of Covid-19, the war in Ukraine and government fiscal mismanagement – it’s hardly news – but recently released figures from the Venture Forward report hammer home the scale of problem facing the sector and the country.

According to the survey, which analysed 2.3 million microbusinesses, around 630,000 small firms are at risk of going bust. Spiralling costs, in particular energy bills, and downward pressure on consumer spending power are listed as the primary factors behind the situation.

The potential impact on the economy of such a large-scale drop in the number of small businesses is startling – the report suggests that should this number of small firms go bust, it would blow a £12 billion hole in the economy. Such findings certainly focus attention on the forthcoming Spring Budget, with small businesses once again vocal in their calls for help amid crushing market conditions.

Safeguarding capital and how alternative finance can help

What can small firms do to stay afloat? The most recent incarnation of the Tory government has shown little appetite for delivering the kind of help that businesses say they desperately need, so firms need to act decisively for themselves to protect their cashflow and to position themselves favourably for growth. 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 post-COVID-19 market conditions, 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 in 2022.

This profile has helped cement the reputation of alternative finance in the business sector, with a recent study showing that more than 50% of small businesses are looking to use finance to achieve growth in 2023.

Keeping the doors open and small firm finance options

Regardless of what the 2023 Spring Budget contains for small businesses, it is vital that firms have the structuring and strategy in place to manage the impact of ongoing challenging market conditions. As the latest research shows, the risk of failure is significant. This is why it is essential that small business owners 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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