The year is just a few weeks old but already small firms are facing up to some key challenges ahead. What are their main concerns for 2025 and how can they safeguard their cash flow as they look to address these issues?

What are the main concerns for small businesses in 2025?

According to new research from Iwoca, rising prices and taxes are among the biggest worries for small businesses in 2025. That these two issues are top of the list for key decision-makers comes as little surprise.

Rising prices has been a particular spiky thorn in the side of small firms for a number of years, with costs relating to energy, labour and materials remaining challenging. There is little sign that the situation will change in the short term and, as such, the pressure on bottom lines continues to be acute.

With regard to taxes, concern stems largely from the perceived impact of the last Budget, particularly in terms of the increase in employer national insurance contributions that is due to come into force from April.

What costs are putting pressure on small firm cash flow?

Other worries for small businesses include costs relating to areas such as cyber-security, especially as threats become more sophisticated; the development of systems and structures to meet sustainability targets, as deadlines get closer; the adoption of digital tech, including the integration of AI; the offer of workplace wellbeing policies and practices, with the focus on mental health growing; and the continued pressure brought by late payment, with a fix still proving hard to find.

Paying bills and funding growth: how alternative finance can help

Given the current climate, it is hardly a shock that small businesses are talking about challenges only a few weeks into the new year, with financial concerns the underlying theme across discussions.

The strain on cash flow has rarely been more heavy, but firms have to find a way to manage the load. This is where alternative finance can help.

While there was some improvement in the second half of 2024, coming into 2025 small business lending from traditional sources remains subdued, with 65% more SMEs experiencing difficulty in accessing finance from high-street banks. As a result, alternative lenders have become increasingly embedded in the small business finance landscape.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate. These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

Notably, the Growth Guarantee Scheme is providing a wide range of finance facilities to smaller firms, including asset finance, invoice finance and asset-based lending. This is further proof that alternative lenders are increasing filling the small business funding gap.

Small firm finance options for managing cash flow in 2025

Is it going to be another year of struggle for small businesses? The early signs have hardly been encouraging but optimism remains. Regardless of how the next 12 months pans out, small businesses need to access finance to face key challenges and invest in growth. This is why it is imperative that decision-makers are aware of all available finance options, 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.