Financial pressure is nothing new for long put-upon small businesses, but some factors are weighing heavier than others as economic conditions continue to be tough. What are the main headwinds and how can firms ease the pressure on cashflow?

So far 2025 has provided very little in the way of respite for small businesses, with few sign that the prolonged period of austerity will come to an end. According to new research from Shawbrook, firms are most worried about sustained price rises and the high cost of living.

With regard to price rises, inflation is a primary concern, identified as such by almost 80% of small businesses. While the rate of inflation rate has come down significantly since a high of over 11% in 2022, a number of factors, including the global economic uncertainty caused by the slew of US tariffs, has stoked fears that the trend will reverse.

As for the cost of living, nearly 7 in 10 small businesses admit that this is a major worry, with three quarters revealing that the cost of running their business in particular is giving them sleepless nights. Again, the general economic uncertainty is a key factor related to this unease.

Another main worry for small businesses going into Q2 is access to funding, with more than half pinpointing securing the right funding as their biggest headache. Notably, firms are proving largely hesitant when it comes to taking on debt.

Addressing cashflow issues and how alternative finance can help

The findings from Shawbrook’s research are hardly surprising, but it is interesting to know what issues are putting most the most pressure on small business cashflow and that accessing funding to ease this pressure is also problem.

How can firms address these issues – both the impact of factors such as price rises and high business costs, and the difficulty in accessing finance to safeguard liquidity? Alternative finance can help.

Small business lending from traditional sources remains subdued into Q2, 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 safeguarding cashflow in Q2 and beyond

If small firms were hoping for a more settled 2025, four months down the line it seems unlikely that they’re going to get their wish. The positive forecasts talked up earlier in the year look, for the moment at least, on shaky ground.

Against this backdrop, balancing the need to safeguard cash flow with the need to invest remains highly challenging. This is why it is important that key decision-makers 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.