Small businesses struggles with investing in cyber-security continue to grab the headlines. Despite clear evidence of the threat posed by cyber-attacks, firms are failing to prioritise spending in this area. How can they strengthen protection while safeguarding cash flow?

What is the next cyber-security threat for small businesses?

The situation couldn’t be much clearer for small businesses: the research on the damage that cyber-attacks can inflict on firms continues to mount, underlining the risks and challenges that they face, both in terms of managing the fall out of an attack and in finding a way to put stronger protection in place.

And the threat continues to evolve. A new study from Gallagher and the Centre for Economics and Business Research highlights a threat that many smaller firms may not have fully considered – the cost of litigation. While it is an issue largely for larger businesses at present, it’s a trend that is likely to grow in the small business sector as investment in cyber-security and the quality of cyber-security strategies and systems comes under greater scrutiny across supply chains.

According to the research, of a total bill of £11.7 billion linked to cyber-attacks involving large businesses in 2025, litigation was revealed as the second largest cost, after direct losses from disrupted operations. Then there are costs related to lost assets, including intellectual property, regulatory fines and reputational damage.

How much are cyber-attacks costing the SME manufacturing sector?

One area where there is notable vulnerability, including potentially in relation to litigation as well as disruption, fines and harm to reputation, is manufacturing, and new data from ESET on cyber-security threats in the SME manufacturing sector highlights the scale of the threat to these firms.

According to the study, over three quarters of UK manufacturers had to deal with a cyber-security incident in the last year, with a whopping 95% revealing that their business was disrupted because an attack. For 75% of these businesses, production was affected for between one and seven days, with the bill for disruption at over £250,000 for more than 50% of those experiencing an incident. The cost for almost 20% of firms was over £1 million.

How alternative lenders can help finance investment in cyber-security

While a lack of awareness and understanding of the problem remains an issue for small businesses, with the ESET study showing that only just over a fifth of SME manufacturing companies make cyber-security the responsibility of top-level executives, it is cost that it proving the most significant barrier to improving cyber-security.

In a climate where uncertainty has become the only certainty and traditional lenders remain resolutely cautious with regard to small business finance, it is hardly surprising that firms are finding it difficult to put more money into cyber-security, whether in terms of staff training or upgraded software and systems. This is where alternative finance can help.

In response to the squeeze on lending, alternative finance has become into a vital lifeline for small firms. Solutions such as invoice finance, asset finance and peer-to-peer lending are filling the funding gap, offering speed, affordability and tailored support.

Notably, the Growth Guarantee Scheme is providing a wide range of finance facilities to smaller firms, including invoice finance, and there has been recent calls for the initiative to be expanded significantly to help smaller businesses struggling to access finance. Such development offers further proof that alternative lenders are increasing filling the small business funding gap.

Small firm options for raising finance for cyber-security investment

Awareness isn’t really the issue when it comes to small business investment in cyber-security – it’s cash, and access to finance. And recent research is only a reminder of the dangers that this threat poses to vulnerable firms, in particular as it continues to evolve.

While a reluctance to commit resources is understandable in the current climate, it is vital that small businesses put the necessary level of protection in place. This is why it is important that key decision-makers are aware of all the finance options available to them, 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.