The Q2 results are in and the small business confidence landscape is pretty clear. Integral to improving sentiment is growth and this requires investment. However, amid long-term gloom, how can firms finance this spending while safeguarding cash flow?

What’s the state of small business confidence in Q2?

According to new data from the latest ACCA and IMA Global Economic Conditions Survey, small business confidence slipped to a record low level in Q2. One of the leading causes revealed by the study was rising operating costs, cited by 80% of businesses as a principal barrier to growth.

At home, businesses pointed to higher taxes and an increase in employment costs, including in relation to a hike in the National Living Wage, as well as growing concerns about late payments, despite the ongoing effort of the government to combat this practice. Further afield, firms highlighted the impact of the war in the Middle East on energy prices and supply chains.

The results of the latest ICAEW Business Confidence Monitor paint a similar picture with regard to business confidence in Q2, with the data showing a sharp fall. Again, rising operating costs are at the forefront of the trend, impacting spending across the board.

According to the Index, business confidence fell to -14.6, the lowest on record since Q4 2022. In terms of rising costs, firms cited spiralling energy costs, increasing labour costs and a five-year spike in late payment as key pressures. The drop in sentiment was felt across almost the entire industry, with eight out of the nine sectors monitored by the Index seeing downturn, most significantly in business services and property.

How alternative lenders can help with essential small business investment

The results of the recent surveys on business confidence make pretty grim reading, with the historic low level looking set to continue for almost half a decade. Firms need meaningful economic growth, coupled with the ability to invest, in order to turn this trend around.

With regard to investing, access to finance in critical, and prolonged caution from traditional banks is another obstacle that is squashing development plans. 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 business options for financing investment in H2 2026 and beyond

Although they’ve made the headlines, the findings of the recent surveys are hardly surprising – they won’t be a shock to small business owners that have been battling serious headwinds for a long time. However, small firm investment remains critical.

Of course, achieving this remains highly challenging, not least because legacy lenders continue to cautious about small business lending. 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.