How Are Hackers Using AI to Break Into Small Businesses And What Can Be Done About It?

Small businesses are facing a new wave of cyberattacks, and the playing field has shifted dramatically.

Hackers are no longer simply lone operators relying on technical skill. Now, they’re armed with powerful AI systems that automate, scale and sharpen their attacks at unprecedented speed. And, according to cybersecurity experts, small firms are now among the most vulnerable targets.

The scale of the problem is fairly clear.

According to Security Today, 82.6% of phishing emails analysed between September 2024 and February 2025 showed signs of AI use. Meanwhile, CrowdStrike reports that 76% of organisations admit they can’t keep pace with AI-powered attacks. For small businesses lacking dedicated IT teams or enterprise-grade defences, the risks are even greater – it’s simply too difficult too keep up at pace.

“Small businesses are prime targets because they typically lack the security infrastructure of larger corporations, yet they handle valuable customer data and financial information,” explains Pete Cannata, COO of Atlantic.Net, a leading global managed hosting and cloud services provider. “Hackers know this, and they’re using AI to exploit these gaps at scale.”

The Five AI Threats Every Small Business Should Know

Cannata outlines five major AI-driven threats that are now hitting smaller organisations the hardest and what can be done to stop them.

1. AI-Generated, Highly Personalised Phishing

Phishing has evolved far beyond the days of cartoonish scams and obvious typos. AI now analyses public data, employee profiles and even previous breaches to generate convincing emails targeted at specific people inside a business.

“The AI can scrape LinkedIn profiles, company websites and previous data breaches to personalise each message,” says Cannata. “An HR manager might receive what looks like a legitimate invoice from a known vendor, complete with accurate project details.”

To defend against this, Cannata advises implementing DMARC, SPF and DKIM; creating a strong verification culture; deploying AI-powered email filters; and running regular phishing simulations.

2. Deepfake and AI-Powered Impersonation

Deepfakes are moving from what was once a novelty to what is now a threat.

According to KeepNet Labs, more than 10% of companies have already faced deepfake fraud, while SC Media reports that 62% experienced AI-driven attacks in the past year.

“We’re seeing cases where attackers clone an executive’s voice from publicly available conference talks,” Cannata warns. “They then use that clone to make phone calls requesting immediate action.”

Verification protocols for financial requests, multi-person approval and training staff to spot social engineering remain essential.

3. AI-Enhanced Password Cracking

Using huge datasets of leaked credentials, AI tools can now generate shockingly accurate password variants and bypass many common passwords within weeks. According to Tech Advisors, AI tools can break 81% of common passwords within a month.

“If your password is ‘Summer2024!’ you might think you’re being clever,” Cannata says. “But AI tools know that people capitalise the first letter, use seasonal words, add the current year and finish with an exclamation point.”

Multi-factor authentication, password managers and dark web monitoring are now baseline requirements rather than optional extras.

4. Shape-Shifting, AI-Generated Malware

Traditional antivirus software can’t keep up with AI that generates new malware variants on the fly. These polymorphic threats constantly change their “appearance” while maintaining the same malicious function.

“The malware evolves faster than traditional defences can adapt,” Cannata explains. “By the time security databases update to recognise one variant, the AI has already created ten new ones.”

Behaviour-based endpoint protection and offline backups are critical tools in preventing these attacks from spreading.

5. Automated Reconnaissance and Attack-Chain Planning

AI doesn’t just attack – first, it scouts. It scrapes organisational charts, identifies relationships and maps vulnerabilities. VikingCloud research shows 40% of cybersecurity leaders believe recent attacks were driven by AI.

“The AI builds a complete profile of your business before the attack even begins,” Cannata says. “It knows your vendors, your employees, your technology stack, and your weak points.”

Limiting public information, conducting regular security audits and adopting zero-trust architecture can significantly reduce risk.

Why Small Businesses Must Act Now

For Cannata, the message is urgent but not hopeless.

“The reality is that most organisations can’t match the speed of AI-powered attacks. For small businesses, this means being strategic with what you have. Employee training is your first line of defence. Most successful breaches happen because someone clicked a link or approved a request they shouldn’t have.”

He adds that accessible security tools – from MFA to AI-powered email filters – can meaningfully reduce exposure: “What matters is taking action now, not after you’ve been hit.”