When it comes to cyber safety, AI is proving a double-edged sword – both helping efficiency and being used by criminals to enhance attacks. Strengthening defences is critical. But how can small firms balance upping investment with safeguarding cashflow?

AI-assisted cyber-attacks and what small firms are doing about this threat

The vulnerability of small business to cyber-attacks needs little reiteration, but recent research from Hiscox underlines the extent to which these firms are being targeted. According to the company’s cyber readiness report, over a third of small firms have experienced a successful cyber-attack in the last year. It puts the average cost of such a hack at almost £27,000.

An increasingly common feature of these attacks is the use of AI. Cyber-criminals are leveraging AI to make cyberattacks faster, hyper-personalised and cheaper to execute at scale. For example, businesses are being targeted by hyper-personalised spear-phishing, voice cloning and deepfake scams and mass vulnerability scanning. For smaller firms, which often operate with limited IT resources, this shift in the threat landscape poses a significant risk.

That is not to say that small businesses aren’t taking action. According to a new study from Barclays, over two thirds of companies are planning to increase investment in cyber-security in the next 12 months, with AI adoption playing a key role in this strategy development. However, it is notable that much of the momentum behind this surge is coming from larger firms. Smaller businesses are moving much more slowly, with only 26% of small businesses and 4% of micro businesses having increased cyber-security spending so far in 2026.

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

Despite the risk of damage to customer trust and confidence, loss of revenue, loss of sensitive data and operational disruption, it is clear that many small businesses are dragging their feet when it comes to investment in cyber-defences, even as AI makes the threat even more acute.

And this is completely understandable. Because the root problem behind the slower uptake is cost – both in terms of finding the money for investment while protecting working capital in a market environment wracked by uncertainty, and with regard to accessing finance when traditional banks continue to be cautious when it comes to small business lending.

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 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 finance options for investing in cyber-security

The increasing use of AI by cybercriminals undoubtedly raises the threat level for small businesses, and they have to respond in kind by upping investment in their cyber-defences, to ensure both their continued attractiveness to customers and business partners, and their ongoing market viability.

As such, with margins and cashflow under pressure and access to finance challenging, if firms are going to invest in cyber-security, 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.