Despite the continued pressure on cash flow, small firms are still targeting growth. However, accessing the finance to facilitate investment remains a challenge. What’s the solution for businesses in H2 2025 and beyond?

A raft of new research has underlined the difficulties small firms continue to face. According to a new study from Intuit QuickBooks, almost 60% of SMEs are concerned about rising costs in the months ahead, with almost two thirds worried about the impact that this will have on operations. Nearly half reported cash flow problems.

Against this backdrop, it is hardly surprising to see HR software platform Employment Hero reporting that smaller businesses are stuck in “survival mode”, with a limited capacity to grow or innovate. Although the report focuses on a disconnect between being busy and productivity, and the role of job satisfaction, the impact of prolonged pressure on finances has to be a factor as well.

Interestingly, one way in which this pressure is manifesting itself in the small business sector, according to new HMRC statistics, is a widening small firm tax gap. According to the data, 40% of the corporation tax due by small business isn’t being paid.

That is not say that small firms aren’t keen to invest – quite the opposite. However, bringing in another key issue, access to finance is proving a significant barrier. According to new research form Umazi, almost a third of SMEs that took part in its survey lacked access to funding, while nearly a quarter had applied for financial support and had been rejected or had faced delays.

Affording investment and how alternative finance can help

The results of the new studies paint an interesting picture. While the pressure on cash flow is unrelenting, with the ability to pay bills becoming increasingly difficult, and access to funding remains challenging, there is still a desire to invest in growth.

How can they do it? 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 business finance options for accessing investment funding

Small business sector development, and the ability of firms to innovate and grow, is vital, but as the recent research shows, the barriers to achieving such development remain significant, not least as accessing funding from traditional lenders continues to be challenging. This is why it is important that key decision-makers are aware of all the funding options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.