Will 2026 be the year that small businesses finally get to grips with cyber-security? If it is, and the sector is going to see a spike in investment, then access to finance will be crucial. With traditional lenders remaining cautious, how are firms going to do it?

How big a threat are cyber-attacks to small businesses?

A spate of end-of-year reports have underlined the importance of small business spending on cyber-security, with some eye-popping figures highlighting the size of the threat. According to new research published by Paul Reynolds, almost half of businesses reported a cyber-attack in 2025, costing the sector an astonishing £27 billion.

Notably, the analysis states that small businesses are particularly vulnerable because they are “easy targets” with “weak defences”. The direct cost of an attack, on average, for firms is put at £4,200, before the impact on reputation and resources is factored in. Unsurprisingly, the research makes the point that attacks are causing some small firms to go out of business, which in turn emphasizes the fact that absorbing such costs in the current climate is becoming increasingly difficult.

A new report from BT paints a similar picture. It finds that smaller businesses are being especially hard hit by cyber-attacks, particularly firms with 25 employees or less, which are identified as the group most commonly targeted by cyber-criminals. Again, the vulnerability is put down to limited resources, both in relation to training and hardware.

Interestingly, phishing is identified as the most prevalent type of cyber-attack, while the incidence of ransomware attacks has increased the most, up 100% in 2025. Furthermore, according to BT, small businesses are highly vulnerable to ransomware attacks, with accountancy, legal and consultancy firms the most frequently targeted.

How alternative finance can help with small firm cyber-security spend

Looking at the figures presented by Paul Reynolds and BT, it is clear why investment in upgrading cyber-security systems is so important. There is an urgent need to increase spending on training to improve understanding of the issue and on hardware to improve systems and infrastructure. Yet, for all the insight, progress is proving stubbornly slow.

Affordability is obviously an issue, and an understandable one, with difficulty in accessing finance contributing to the lack of investment in sufficiently robust cyber-protection at small businesses. This is where alternative finance can help.

Small business lending from traditional sources remains subdued in 2026, with almost 40% of firms finding accessing affordable finance one of their biggest challenges. Notably, there has been a call for the introduction of legislation that would require banks to increase access to low-cost lending for small businesses.

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.

Options for small business cyber-security investment in 2026

Whether the threat posed by cyber-attacks to small businesses eases in 2026 remains to be seen. While proposed legislation around small firm cyber-security and small business lending are positives, the benefits are unlikely to be seen for quite some time, if at all. Hence, the onus lies on small firms and their ability to fund investment, and in turn to access finance.

As such, given the current small business lending climate, if small firms are going to be able to invest and achieve their cyber-security goals, it is vital that key decision-makers are 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.