As the incidence of cyber-attacks on small businesses continues to grow, it is clear that greater investment in stronger protection – from systems and software to insurance – is critical. But how can under-pressure balance spending while protecting cash flow?

How much damage are cyber-attacks doing to small businesses? According to Vodafone, the annual bill is an incredible £3.4 billion, while the cost of a single attack is almost £3,400. The main reason for this vulnerability, says the report, is inadequate cybersecurity measures, with almost a third of firms having no cybersecurity protections in place at all.

Results from a new study from broking firm Marsh back up this claim. According to the research, far fewer SMEs require multi-factor authentication for remote logins compared to large organisations, and only 40% of SMEs carry out incident response plan testing, compared to over 60% of large organisations.

Protection and profit: the benefits of SME cybersecurity investment

Such findings underline the fact that small businesses need to bridge the cybersecurity gap and achieve greater cyber resilience. Interestingly, taking such action is not only a question of better protection – the ongoing fallout of the cybersecurity attack on M&S and the cost for the household retailer is case in point (£300 million and counting) – but increasingly it is also becoming essential to doing business, both in the private and public sectors.

Large organisations have been, for a while now, increasingly stipulating minimum standards of cybersecurity systems for business partners, while the announcement of the Cyber Security and Resilience Bill earlier in the quarter indicates that public sector entities are beginning to put similar contractual conditions in place.

Then there is the growing focus on cybersecurity insurance for small firms, which is a strategy that, given the growing risk of attack and continued feet dragging around strengthening protection, as well as the costs of such attacks (not just lost revenue but also legal, PR and regulatory bills), seems increasingly prudent. Notably, only just over 50% of companies have a cyber insurance policy (while according to the government, over 50% of businesses have been hit by an attack over the last year).

Investing more in cyber-security and how alternative finance can help

Why are small businesses struggling to put in place proper cybersecurity? Unsurprisingly, one of the main reasons is cost. Against the backdrop of prolonged austerity and fresh uncertainty, it is understandable that firms are taking a cautious approach to investing.

How can they spend while safeguarding cash flow? 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.

Small firm finance options for strengthening cyber-resilience

The latest figures on cyber-attacks underline the urgency behind small business investment in strengthening their cyber-resilience. Of course, given the current climate, with so much pressure on cash flow, it is question of affordability, and in particular, with traditional lenders continuing to show caution small firm funding, how can they access finance.

This is why it is important that key-decision makers are aware of all the finance options available, 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.