A new survey by Time Finance shows that the rising costs are forcing SMEs to scale back their investments.
The study revealed that one in five SMEs are not able to invest in growing their business and one in ten businesses are unable to meet their existing financial commitments.
Time Finance, which provides funding solutions to UK businesses, has warned that scaling back investments will have a wider impact on the economy.
Time Finance CEO Ed Rimmer said: “There is undoubtedly a huge cost of living crisis that must be addressed but by putting the onus on businesses to reduce their prices while they themselves are experiencing rising costs, we would simply be solving one problem by exacerbating another.
“To see that a fifth of businesses cannot afford to invest in their own growth is a worrying indication of where our economy is headed. If we do not prioritise support for businesses, not only will they struggle to keep up with the day-to-day costs of running a business such as paying suppliers, staff wages or making critical investments, but sadly some just will not survive.”
In early July, Time Finance found that 63% of businesses have hiked their prices by 10% and one in five by up to a 30%.
According to the firm, for some SMEs increasing the prices has been necessary to keep them afloat.
However, the rising cost of living and the government’s pressure to reduce costs will leave many in a state of dismay, it added. Every year, around 20,000 business owners access Time Finance’s services that include asset finance, invoice finance, loans and vehicle finance.