The government is promising to reducing it, but red tape continues to be a huge burden for small businesses, costing them billions every year. How can these firms manage the costs while safeguarding cash flow at the same time?

Red tape, compliance, whatever we want to label it – it is heaping pressure on small businesses that are already struggling to cope with countless demands on their cash amid highly challenging market conditions.

According to a new survey from the Federation of Small Businesses, red tape is costing small firms an astonishing £36 billion a year, with businesses losing around 379 million working hours in the process of dealing with it.

As such, it’s not difficult to see how red tape could be blocking sector investment and development. Think how useful that money would be to firms right now. And the other ways in which that time could be spent. It could be invested in new products and processes, or planning growth.

Notably, red tape is an issue that has been brought up recently in relation to the national apprenticeship scheme. Research from Employment Hero shows that while almost three quarters of SMEs are ready to take advantage of the new reforms, over 40% say that using the apprenticeship system is too complicated, which is stopping them from using it and hiring young people.

How alternative lenders can help with small business finance

Red tape is clearly a problem for small businesses, affecting investment in numerous areas, including apprentices. The government is aware of the issue, but its efforts at reform, including the Employment Rights Act, have come in for plenty of criticism, with doubts as to whether the proposed changes will provide enough help to small firms.

As such, it is clear that small businesses need to be proactive with dealing with red tape-related costs. As ever, accessing finance is integral to meeting this challenge and others. However, with traditional banks continuing to be cautious with regard to small business lending, with nearly 40% of firms struggling to secure the affordable capital they need to survive, an already difficult picture is being made more complicated.

This is where alternative finance can help.

In response to this squeeze, alternative finance has become into a vital lifeline. Solutions such as invoice finance, asset finance and peer-to-peer lending are filling the funding gap, offering speed, affordability and tailored support. These agile funding facilitates are helping small businesses survive and target stability and growth.

Options for accessing small firm finance in 2026

Red tape has long been a thorn in the side of small businesses and the pain it causes remains as acute as ever. Integral to managing its impact on cash flow and maintaining the availability of capital for essential investment is access to finance.

However, in the current climate, with caution towards small business lending continuing amid global economic uncertainty and depressed market conditions, this represents a significant challenge for small firms. This is why it is important 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 Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.