The year is only days old, but there are already signs that it will be another challenging one for small businesses, with accessing finance continuing to be far from straightforward. What are the key indicators and how can firms balance protecting cash flow with investment?

What lies ahead for small business investment and lending in 2026?

There is some positive talk, including around falling energy prices, but the economic forecast for the year ahead is one of fragile recovery. And this may prove a best-case scenario. The picture was very similar 12 months ago and the much vaunted green shoots came to very little. Add in the fresh market uncertainty caused by recent US foreign policy developments and it is hardly surprising that business optimism remains low.

That said, business optimism ended the year on the rise, albeit staying at a very low level. It remains to be seen if this upturn continues or it turns out to be an anomaly; however, news that fewer businesses are expecting a rise in sales in 2026 does little to suggest that there will be a meaningful increase in confidence. At the moment, it is hard to argue with predictions that business investment will remain weak as a result of cost pressures and uncertainty.

Nevertheless, an appetite for investment and growth remains – despite the bumpy outlook, there are small firms targeting expansion and development. Notably, there are plenty of areas in which small businesses will need to spend money, including in regard to strengthening cyber-security systems, progressing decarbonisation goals, managing late payment issues, developing the integration of AI and dealing with recruitment and retention costs.

How alternative finance can help with accessing investment capital

With this outlook in mind, if small businesses are going to achieve their goals in 2026, accessing finance will be critical, and, with uncertainty set to continue to frame market performance, this looks set to remain challenging. In 2025, one in three small firms struggled to get funding they need to survive grow according to research from Umazi and there is little to suggest this situation will change. This is where alternative finance can help.

Small business lending from traditional sources remains subdued as 2026 begins, with almost 40% of firms finding accessing affordable finance one of their biggest challenges. Against this backdrop, 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 options for accessing finance in 2026

The year ahead is forecast to be another tricky one for small businesses, with macro- and micro-level uncertainty seemingly continuing to be defining market characteristics. In line with this, accessing finance will remain both critical and challenging, with investment in a range of areas essential.

As such, with traditional lenders remaining cautious, it is important that key-decision makers are aware of all the available finance options in 2026, 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.