Managing government red tape is holding back small business growth according to a new report. Allocating more resources is a solution, but cost is a barrier. How can firms deal with the impact on cash flow and find the money to invest?

Why is red tape a significant problem for small firms now?

A new study from FreeAgent suggests that government bureaucracy is stalling small business growth. Around a half of firms stated that they find business reporting a challenge, while over a half said that compliance issues are a barrier to their ability to scale. Overall, almost 20% of businesses blamed government regulations for blocking development.

While red tape is a perennial issue, the impact is notably acute now, and not just because pledges to reduce the burden of bureaucracy have fallen short for a significant number of businesses. Cash flow is under attack from multiple sources and the difficulty presented by managing the resources needed to meet reporting and compliance regulations is only adding to the strain.

Interestingly, the FreeAgent research also highlights cash flow problems and challenges related to securing funding as major headaches for small businesses. More than half  of firms reported that they need additional funding to meet scaling targets, while almost a third have trouble meeting payroll.

Investing in business admin expertise and how alternative finance can help

It’s hardly surprising that small businesses are complaining about the impact of government red tape and cash flow and funding challenges. Finding the cash to invest in essential systems while balancing cash flow has rarely been harder. This is where alternative finance can help.

Small business lending from traditional sources remains subdued as the end of Q2 approaches, with SMEs still experiencing difficulty in accessing finance from high-street banks. As a result, alternative lenders are becoming 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.

SME finance options for investing in essential admin systems

Business admin is far from glamorous but it is essential. In the face of complaints, the government continues to promise that the burden will be eased. What this help will look like and when it appears remains to be seen. In the meantime, small firms have to find a way of managing the impact on resources. This is why, against the backdrop of continued traditional lender reluctance, key decision-makers should be aware of all the 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.