If trade tariffs have slipped temporarily from the headlines, it doesn’t mean their impact isn’t being felt. Dealing with the fallout of the scattergun US policy is a key challenge for many UK SMEs. How can firms manage the costs while safeguarding cash flow?

New research from Paragon Bank has highlighted the extent to which US trade tariffs are affecting small businesses in the UK. According to the recent study, one in five SMEs cite the impact of trade tariffs as a major challenge facing their business. Notably, these firms point to rising costs and supply chain disruption as key concerns.

Another worry related to the rise in tariffs is the impact on profit margins, with around 25% of firms revealing that they have been affected in this way. In addition, almost as many are having to deal with reduced access to export markets or shrinking demand from overseas customers. The most exposed sectors are transportation and storage, and manufacturing, with one in three and one in four firms, respectively, admitting that they have been hit.

Furthermore, a direct increase in costs is not the only challenge. The uncertainty surrounding the tariffs, including their uneven application and legality, is having a knock-on effect on planning and decision-making, and production schedules. All of this adds up to extra pressure on cash flow and bottom lines, and with investment and growth plans being delayed or downsized as a result.

How alternative lenders can help with tariff cost management

With little indication of when the current trade tariff upheaval will come to an end, SMEs have little choice to ride out the storm as best they can. And this is by no means a straightforward task. In such conditions, access to finance is critical, and in this regard, ongoing caution from traditional banks to SME lending is making a difficult situation even tougher.

This is where alternative finance can help.

Small business lending from traditional sources remains subdued in Q1 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.

SME finance options for safeguarding cash flow in 2026

The squeeze being put on UK SMEs by US trade tariffs couldn’t come at a worse time – the sector is already under significant pressure thanks to a severe set of market headwinds and a range of pressing demands on business capital, from the need to strengthen cybersecurity to managing the impact of late payment.

To safeguard cash flow and survive this volatility, accessing finance is vital, and against a background of continued caution from traditional banks, it is essential that key decision-makers at SMEs 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.