A new report from the Federation of Small Businesses said cyber crime and fraud cost its 200,000 members around £800m a year, or £3,926 each on average.
But the total cost for small businesses across the UK is likely to be much higher, Publicservice.co.uk understands.
Government figures estimate that there are 4.8 million small firms across the country. This would mean a total cost of more than £18.8bn based on the FSB's average.
The federation said that around three in 10 of its members had been victims of fraud.
And when it came to online crime, the most common threat faced was from virus infections, which a fifth of businesses had been victims of. Another 8 per cent had been victims of hacking and 5 per cent had suffered security breaches.
But despite the costs, almost 20 per cent of businesses had taken no steps to protect themselves from cyber crime.
Wider economic repercussions were also feared with many small businesses refusing to trade online due a lack of faith in security.
"Cyber crime poses a real and growing threat for small firms and it isn't something that should be ignored," said Mike Cherry, the FSB's national policy chairman.
"Many businesses will be taking steps to protect themselves but the cost of crime can act as a barrier to growth.
"Many businesses will not embrace new technology as they fear the repercussions and do not believe they will get adequate protection from crime.
"While we want to see clear action from the government and the wider public sector, there are clear actions that businesses can take to help themselves."
The federation has now issued new advice to small firms, which follows previous attempts by the government to encourage businesses to take cyber security seriously.
Security minister James Brokenshire said: "We need to make sure that all businesses, large and small are engaged in implementing appropriate prevention measures in their business.
"This report will help give a greater understanding of how online security and fraud issues affect small businesses, giving guidance as well as valuable top tips to protect their business."
Business minister David Willets added: "We know only too well of the importance of securing buy-in from both big and small business in implementing appropriate protection against cyber risks - business success can depend on it. Increasing security drives growth."
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