Small businesses in the United States are pessimistic about their prospects, but less pessimistic than two years ago.
\nThe National Federation of Independent Business (NFIB) Small Business Optimism Index rose 2.2 points last month to 93.7, the highest reading since February 2022, according to a Tuesday (Aug. 13) press release.
\nStill, this is the 31st month in a row that the index has been below the 50-year average of 98, with small business owners continuing to feel pressured by inflation, the release said. One-quarter of business owners called it their biggest problem, up four points since June.
\n\u201cDespite this increase in optimism, the road ahead remains tough for the nation\u2019s small business owners,\u201d NFIB Chief Economist Bill Dunkelberg said in the release. \u201cCost pressures, especially labor costs, continue to plague small business operations, impacting their bottom line. Owners are heading towards unpredictable months ahead, not knowing how future economic conditions or government policies will impact them.\u201d
\nThirty-three percent of business owners (seasonally adjusted) raised compensation in July, down five points from June and the lowest reading in more than three years, per the release.
\nIn addition, the net percent of owners anticipating higher real sales volumes climbed four points in July to a net negative 9% (seasonally adjusted), the highest reading of this year, the release said. The net percentage of owners raising average selling prices dropped five points from June to a seasonally adjusted net 22%.
\nAs PYMNTS wrote last month \u2014 following the release of another pessimistic NFIB report for June \u2014 the challenges facing small businesses have led to the emergence of new working capital products and financial services.
\nThese offerings can provide \u201cmore innovative and flexible solutions designed to help insulate businesses from ongoing economic fluctuations such as inflation, interest rate changes and even currency volatility,\u201d the report said
\nThese innovations include products such as virtual and commercial cards, supply chain finance, invoice finance and asset-based lending, giving businesses faster access to funds, better cash flow management and the ability to invest in growth opportunities without having to take on traditional debt.
\nFor all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.
\nThe post NFIB: Small Business Optimism Grows Amid \u2018Plague\u2019 of Cost Pressures appeared first on PYMNTS.com.
\n", "content_text": "Small businesses in the United States are pessimistic about their prospects, but less pessimistic than two years ago.\nThe National Federation of Independent Business (NFIB) Small Business Optimism Index rose 2.2 points last month to 93.7, the highest reading since February 2022, according to a Tuesday (Aug. 13) press release.\nStill, this is the 31st month in a row that the index has been below the 50-year average of 98, with small business owners continuing to feel pressured by inflation, the release said. One-quarter of business owners called it their biggest problem, up four points since June.\n\u201cDespite this increase in optimism, the road ahead remains tough for the nation\u2019s small business owners,\u201d NFIB Chief Economist Bill Dunkelberg said in the release. \u201cCost pressures, especially labor costs, continue to plague small business operations, impacting their bottom line. Owners are heading towards unpredictable months ahead, not knowing how future economic conditions or government policies will impact them.\u201d\nThirty-three percent of business owners (seasonally adjusted) raised compensation in July, down five points from June and the lowest reading in more than three years, per the release.\nIn addition, the net percent of owners anticipating higher real sales volumes climbed four points in July to a net negative 9% (seasonally adjusted), the highest reading of this year, the release said. The net percentage of owners raising average selling prices dropped five points from June to a seasonally adjusted net 22%.\nAs PYMNTS wrote last month \u2014 following the release of another pessimistic NFIB report for June \u2014 the challenges facing small businesses have led to the emergence of new working capital products and financial services.\nThese offerings can provide \u201cmore innovative and flexible solutions designed to help insulate businesses from ongoing economic fluctuations such as inflation, interest rate changes and even currency volatility,\u201d the report said\nThese innovations include products such as virtual and commercial cards, supply chain finance, invoice finance and asset-based lending, giving businesses faster access to funds, better cash flow management and the ability to invest in growth opportunities without having to take on traditional debt.\nFor all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.\nThe post NFIB: Small Business Optimism Grows Amid \u2018Plague\u2019 of Cost Pressures appeared first on PYMNTS.com.", "date_published": "2024-08-13T12:20:23-04:00", "date_modified": "2024-08-13T12:20:57-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/01/small-business-owner.jpg", "tags": [ "B2B", "B2B Payments", "commercial payments", "economy", "inflation", "national federation of independent business", "News", "NFIB", "PYMNTS News", "SMBs", "What's Hot", "What's Hot In B2B" ] }, { "id": "https://www.pymnts.com/?p=2022536", "url": "https://www.pymnts.com/smbs/2024/coe-distributing-ceo-soaring-shipping-costs-hit-small-businesses-hard/", "title": "COE Distributing CEO: Soaring Shipping Costs Hit Small Businesses Hard", "content_html": "In his testimony last month before the House Small Business Committee, COE Distributing Chairman and CEO J.D. Ewing highlighted the issue of soaring shipping costs impacting small businesses.
\nEwing, who has led COE \u2014 a family-owned office furnishings wholesaler based in Fayette County, Pennsylvania \u2014 from its modest beginnings to the largest office furniture distributor in the United States, described the severe economic strain caused by skyrocketing shipping expenses.
\nEwing detailed how supply chain disruptions have led to an increase in shipping costs. The cost of transporting a container from Asia to the U.S. West Coast has surged from $2,500 in April to more than $8,000, with projections suggesting it could exceed $10,000 as peak shipping season approaches. These skyrocketing costs are intensified by renewed congestion at major ports and disruptions in key maritime routes, such as the Red Sea and the Suez Canal.
\nIn an interview with PYMNTS, Ewing explained how re-emerging supply chain issues have negatively impacted his business in three ways.
\n\u201cIncreased transit times, which wreak havoc on our inventory availability and forecasting,\u201d he said. \u201cCapacity constraints, which further increase lead times on products, put more pressure on our inventory availability and forecasting. Increased costs for ocean freight, which decreases gross margin and bottom-line performance.\u201d
\nFor small businesses like COE Distributing, these rising shipping costs are particularly challenging. Unlike larger firms with greater liquidity and economies of scale, small businesses struggle to absorb or pass on these expenses, which can erode margins and impact competitiveness. Ewing warned that this shipping crisis could soon ripple through the entire economy, driving up prices for manufacturers, distributors and consumers alike.
\nCOE Distributing has operated since 1947, when Ewing\u2019s grandmother started the business in the basement of a tavern. Ewing is a third-generation owner of COE Distributing after taking over the business in 1989 when he was 19. At that time, he was COE\u2019s sole employee and managed multiple roles, including sales, driving trucks, loading products, collecting money, paying bills and learning each position inside and out.
\n\u201cMost major home furnishings retailers have already instituted surcharges on goods sourced in Asia, which has a direct and immediate impact on the American consumer,\u201d Ewing said. \u201cIf the current environment continues, surcharges and/or price increases will be seen on any/all products imported across Asia,\u201d including electronics, clothing, some food products and building materials.
\nEwing also touched on additional pressures, including potential tax hikes for pass-through entities and regulatory compliance. He stressed that the immediate and severe impact of increased shipping costs threatens small business viability and calls for urgent policy attention to address these supply chain challenges.
\nSo, what needs to be done to reduce costs and what can the U.S. government do to help small businesses like COE Distributing?
\n\u201cFirst, this issue is an \u2018all business size\u2019 problem, but small businesses feel greater impact,\u201d Ewing explained. \u201cI believe removing the terror threat in the Red Sea, eliminate the Houthis\u2019 (or any terror group) ability to strike any maritime carrier will allow the Suez Canal to be used for passage, thus reducing transit time, capacity constraints and ocean freight costs.\u201d
\nThe next steps for Ewing include talking more about his testimony and following up with the House Small Business Committee.
\n\u201cBest case scenario is to eliminate/neutralize the terror threat in the Red Sea region, thus allowing the Suez Canal to be fully utilized by ocean carriers,\u201d Ewing said. \u201cWorst case scenario is to do nothing. Without the Suez Canal reopening, ocean freight will continue to be volatile in availability, timing and pricing.\u201d
\nThe post COE Distributing CEO: Soaring Shipping Costs Hit Small Businesses Hard appeared first on PYMNTS.com.
\n", "content_text": "In his testimony last month before the House Small Business Committee, COE Distributing Chairman and CEO J.D. Ewing highlighted the issue of soaring shipping costs impacting small businesses.\nEwing, who has led COE \u2014 a family-owned office furnishings wholesaler based in Fayette County, Pennsylvania \u2014 from its modest beginnings to the largest office furniture distributor in the United States, described the severe economic strain caused by skyrocketing shipping expenses.\nEwing detailed how supply chain disruptions have led to an increase in shipping costs. The cost of transporting a container from Asia to the U.S. West Coast has surged from $2,500 in April to more than $8,000, with projections suggesting it could exceed $10,000 as peak shipping season approaches. These skyrocketing costs are intensified by renewed congestion at major ports and disruptions in key maritime routes, such as the Red Sea and the Suez Canal.\nIn an interview with PYMNTS, Ewing explained how re-emerging supply chain issues have negatively impacted his business in three ways.\n\u201cIncreased transit times, which wreak havoc on our inventory availability and forecasting,\u201d he said. \u201cCapacity constraints, which further increase lead times on products, put more pressure on our inventory availability and forecasting. Increased costs for ocean freight, which decreases gross margin and bottom-line performance.\u201d\nFor small businesses like COE Distributing, these rising shipping costs are particularly challenging. Unlike larger firms with greater liquidity and economies of scale, small businesses struggle to absorb or pass on these expenses, which can erode margins and impact competitiveness. Ewing warned that this shipping crisis could soon ripple through the entire economy, driving up prices for manufacturers, distributors and consumers alike.\nCOE Distributing has operated since 1947, when Ewing\u2019s grandmother started the business in the basement of a tavern. Ewing is a third-generation owner of COE Distributing after taking over the business in 1989 when he was 19. At that time, he was COE\u2019s sole employee and managed multiple roles, including sales, driving trucks, loading products, collecting money, paying bills and learning each position inside and out.\n\u201cMost major home furnishings retailers have already instituted surcharges on goods sourced in Asia, which has a direct and immediate impact on the American consumer,\u201d Ewing said. \u201cIf the current environment continues, surcharges and/or price increases will be seen on any/all products imported across Asia,\u201d including electronics, clothing, some food products and building materials.\nCombatting Supply Chain Challenges\nEwing also touched on additional pressures, including potential tax hikes for pass-through entities and regulatory compliance. He stressed that the immediate and severe impact of increased shipping costs threatens small business viability and calls for urgent policy attention to address these supply chain challenges.\nSo, what needs to be done to reduce costs and what can the U.S. government do to help small businesses like COE Distributing?\n\u201cFirst, this issue is an \u2018all business size\u2019 problem, but small businesses feel greater impact,\u201d Ewing explained. \u201cI believe removing the terror threat in the Red Sea, eliminate the Houthis\u2019 (or any terror group) ability to strike any maritime carrier will allow the Suez Canal to be used for passage, thus reducing transit time, capacity constraints and ocean freight costs.\u201d\nThe next steps for Ewing include talking more about his testimony and following up with the House Small Business Committee.\n\u201cBest case scenario is to eliminate/neutralize the terror threat in the Red Sea region, thus allowing the Suez Canal to be fully utilized by ocean carriers,\u201d Ewing said. \u201cWorst case scenario is to do nothing. Without the Suez Canal reopening, ocean freight will continue to be volatile in availability, timing and pricing.\u201d\nThe post COE Distributing CEO: Soaring Shipping Costs Hit Small Businesses Hard appeared first on PYMNTS.com.", "date_published": "2024-08-05T14:53:00-04:00", "date_modified": "2024-08-06T22:44:47-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2023/02/shipping-supply-chain.jpg", "tags": [ "B2B", "B2B Payments", "COE Distributing", "commercial payments", "digital transformation", "economy", "Government", "House Small Business Committee", "J.D. Ewing", "logistics", "News", "PYMNTS News", "Shipping", "SMBs", "supply chain management" ] }, { "id": "https://www.pymnts.com/?p=2021433", "url": "https://www.pymnts.com/smbs/2024/earnings-season-shows-business-demand-working-capital-loans-remains-robust/", "title": "Earnings Season Shows Business Demand for Working Capital Remains Robust", "content_html": "Although all eyes this earnings season might be focused on consumer spending, there are several puts and takes on business demand for working capital, particularly from what might be termed non-traditional providers such as Block and PayPal.
\nAnd, generally speaking, demand is robust.
\nThe demand comes as the PYMNTS Intelligence report \u201cMain Street Small Business Growth Exceeds GDP for First Time in Two Years\u201d found that Main Street small- to medium-sized business (SMB) growth has exceeded gross domestic product (GDP) growth for the first time in two years. That expansion would feed into plans to tap working capital to keep expanding.
\nBlock, parent company of Square, noted in its earnings presentation this week that there is a $17 billion \u201cgross profit\u201d opportunity for Square Loans, its business lending offering.
\nIn its shareholder letter, the company said Square Loans facilitated approximately 142,000 loans totaling $1.45 billion in originations, up 32% year over year in the quarter. The company\u2019s Form 10-Q with the Securities and Exchange Commission (SEC) noted that the commercial loans held for sale \u2014 which include Square Loans \u2014 stood at $435 million, down from $478 million at the end of last year. The year-ago filings detailed that commercial loans held for sale were $319 million in the June 2023 quarter.
\nPayPal CEO Alex Chriss noted on an earnings conference call with analysts that small businesses represent an \u201cuntapped opportunity\u201d for the company. With the launch of the company\u2019s Complete Payments Platform, he said, \u201cyou get access to our working capital,\u201d among other offerings such as payouts.
\nThe company\u2019s Form 10-K with the SEC indicated that its PayPal Working Capital and PayPal Business Loan products \u2014 collectively referred to as merchant finance offerings \u2014 were tied to the purchasing of approximately $774 million in the latest quarter through the first six months of the year.
\n\u201cAs of June 30, 2024, and December 31, 2023, the total outstanding balance in our pool of merchant loans, advances, and interest and fees receivable was $1.2 billion,\u201d the company said in the filing.
\nIn terms of the mechanics of the working capital products, PayPal said in the filing that merchants can borrow a certain percentage of their annual payment volume processed by PayPal and are charged a fixed fee for the loan or advance based on the overall credit assessment of the merchant.
\nThe company\u2019s metrics in the filing showed an improvement in credit quality, where, for example, roughly 90% of the merchant loans and advances were current, with 4.5% of the book 30 to 59 days past due, compared to 87% and 4.9% in the fourth quarter.
\nSeparately, the PYMNTS Intelligence report \u201cEmbedded Lending: From the Lender\u2019s Perspective,\u201d commissioned by Visa, found that 37% of SMBs said they are highly interested in switching to providers that offer embedded lending options. Additionally, across the six markets surveyed, 83% of lenders offer embedded lending products to customers, compared to 55% that serve SMBs.
\nBut there may be a bit of catch-up in the cards. Two-thirds of lenders that offer no embedded lending are interested in rolling out these products to SMBs in the next two years.
\nThe post Earnings Season Shows Business Demand for Working Capital Remains Robust appeared first on PYMNTS.com.
\n", "content_text": "Although all eyes this earnings season might be focused on consumer spending, there are several puts and takes on business demand for working capital, particularly from what might be termed non-traditional providers such as Block and PayPal.\nAnd, generally speaking, demand is robust.\nThe demand comes as the PYMNTS Intelligence report \u201cMain Street Small Business Growth Exceeds GDP for First Time in Two Years\u201d found that Main Street small- to medium-sized business (SMB) growth has exceeded gross domestic product (GDP) growth for the first time in two years. That expansion would feed into plans to tap working capital to keep expanding.\nBlock, parent company of Square, noted in its earnings presentation this week that there is a $17 billion \u201cgross profit\u201d opportunity for Square Loans, its business lending offering.\nIn its shareholder letter, the company said Square Loans facilitated approximately 142,000 loans totaling $1.45 billion in originations, up 32% year over year in the quarter. The company\u2019s Form 10-Q with the Securities and Exchange Commission (SEC) noted that the commercial loans held for sale \u2014 which include Square Loans \u2014 stood at $435 million, down from $478 million at the end of last year. The year-ago filings detailed that commercial loans held for sale were $319 million in the June 2023 quarter.\nAn Untapped Opportunity\nPayPal CEO Alex Chriss noted on an earnings conference call with analysts that small businesses represent an \u201cuntapped opportunity\u201d for the company. With the launch of the company\u2019s Complete Payments Platform, he said, \u201cyou get access to our working capital,\u201d among other offerings such as payouts.\nThe company\u2019s Form 10-K with the SEC indicated that its PayPal Working Capital and PayPal Business Loan products \u2014 collectively referred to as merchant finance offerings \u2014 were tied to the purchasing of approximately $774 million in the latest quarter through the first six months of the year.\n\u201cAs of June 30, 2024, and December 31, 2023, the total outstanding balance in our pool of merchant loans, advances, and interest and fees receivable was $1.2 billion,\u201d the company said in the filing.\nIn terms of the mechanics of the working capital products, PayPal said in the filing that merchants can borrow a certain percentage of their annual payment volume processed by PayPal and are charged a fixed fee for the loan or advance based on the overall credit assessment of the merchant.\nThe company\u2019s metrics in the filing showed an improvement in credit quality, where, for example, roughly 90% of the merchant loans and advances were current, with 4.5% of the book 30 to 59 days past due, compared to 87% and 4.9% in the fourth quarter.\nSeparately, the PYMNTS Intelligence report \u201cEmbedded Lending: From the Lender\u2019s Perspective,\u201d commissioned by Visa, found that 37% of SMBs said they are highly interested in switching to providers that offer embedded lending options. Additionally, across the six markets surveyed, 83% of lenders offer embedded lending products to customers, compared to 55% that serve SMBs.\nBut there may be a bit of catch-up in the cards. Two-thirds of lenders that offer no embedded lending are interested in rolling out these products to SMBs in the next two years.\nThe post Earnings Season Shows Business Demand for Working Capital Remains Robust appeared first on PYMNTS.com.", "date_published": "2024-08-02T17:59:46-04:00", "date_modified": "2024-08-05T22:27:52-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2023/07/Main-Street.jpg", "tags": [ "B2B", "B2B Payments", "Block", "commercial payments", "embedded finance", "embedded lending", "loans", "News", "PayPal", "PYMNTS News", "SMBs", "working capital" ] }, { "id": "https://www.pymnts.com/?p=2020591", "url": "https://www.pymnts.com/smbs/2024/embracing-a-specialist-approach-helps-lenders-overcome-small-business-difficulties/", "title": "Embracing a Specialist Approach Helps Lenders Overcome Small Business Difficulties", "content_html": "Small businesses represent 99.9% of American firms, yet effectively financing them remains an ongoing challenge.
\nSmall businesses are inherently risky \u2014 and many end up being short-lived operations. And while the demand for innovative lending solutions tailored for small and-medium-sized businesses (SMBs) continues to grow, traditional lenders, particularly large banks, frequently view SMB lending as resource-intensive and unprofitable, and as a result shy away from the space.
\nBut with the news from the U.S. Census Bureau that almost 5.5 million new U.S. business applications were filed in 2023, breaking the 2021 record of 5.4 million, capturing the opportunity this represents for smaller banks and community lenders like credit unions is top of mind for those financial institutions\u2019 executives.
\nAfter all, SMB lending is a multifaceted puzzle, not a commodifiable offering \u2014 which is why community financial institutions are uniquely positioned to capture the small business lending market. With an inherent understanding of their local economies and a personal touch that larger banks often lack, these lenders can find themselves with a competitive edge in their local markets.
\nAnd when it comes to the specialized needs of SMBs, taking a specialized \u2014 rather than generalized \u2014 approach to lending can be the strategy that ultimately pays off.
\nRead more: The $150B Question: Can Community FIs Capture the SMB Digital Banking Opportunity?
\nTo fully seize the SMB lending opportunity, alternative lenders must themselves embrace digital transformation.
\nAs technology continues to evolve and industries become more specialized, the ability to understand and meet the unique needs of small businesses will be a key differentiator. Small businesses, especially startups, often lack the robust financial histories and credit profiles that lenders rely on to assess risk. The absence of substantial collateral and established cash flows makes it difficult for lenders to confidently gauge the likelihood of repayment. This perceived risk is exacerbated by economic downturns, which can disproportionately impact smaller enterprises.
\nAs recent PYMNTS Intelligence noted, 71% of SMBs are experiencing\u00a0cash shortfalls.
\nUnlike large corporations, small businesses exhibit diverse needs and business models. This diversity means that a one-size-fits-all approach to lending is inadequate. Each business may require tailored financial products, such as lines of credit, term loans, or equipment financing, each with different risk profiles and return potential.
\nOnly about 8.5% of\u00a0SMBs\u00a0have found working capital loans from banks to be readily available, according to \u201cWhat\u2019s Next in Credit: Why SMBs Prefer Corporate Credit Cards for Short-Term Financing,\u201d a PYMNTS Intelligence and\u00a0Cross River\u00a0collaboration.
\nMany small businesses do not have sophisticated financial systems or the ability to provide detailed, accurate financial statements. This creates information asymmetry, where lenders cannot accurately assess the health and potential of a business. This challenge is particularly acute for non-traditional or niche businesses that do not fit into standard industry categories.
\nThe\u00a0PYMNTS Intelligence\u00a0report, \u201cThe $150B Question: Can Community FIs Capture the SMB Digital Banking Opportunity?,\u201d done in collaboration with\u00a0NCR Voyix, provides insights into the evolving financial landscape for SMBs and finds that many SMBs are ready to switch to institutions that offer modern digital tools.
\nSee also:\u00a0How Businesses Leverage Working Capital Solutions to Drive Growth
\nThe cost of underwriting and processing loans for small businesses is relatively high compared to the loan amounts. For traditional banks, this means lower profitability per loan, disincentivizing them from focusing on the small business segment.
\nBut embracing a specialist approach allows lenders to offer SMBs customized financial products that meet their specific needs. This might include flexible repayment terms, working capital loans that align with seasonal cash flows or financing options that take into account the growth trajectory of a startup. Such tailored solutions can significantly improve the likelihood of a business succeeding and repaying its loan.
\nJennifer Marriner, EVP,\u00a0GlobalAcceptance Solutions at\u00a0Mastercard, told PYMNTS that SMBs are a significant focus within the embedded finance landscape. She noted that SMBs are particularly attracted to embedded finance as it offers a straightforward way to access financial services through the platforms\u00a0that they\u00a0already use for other business operations, such as accounting and inventory management.
\nThe difficulties associated with small business lending are well-documented, but they are not insurmountable. A specialist approach, characterized by industry expertise, advanced data analytics, customized solutions and strong relationships, offers a viable path forward. And by focusing on the needs of small business owners and leveraging technology, lenders can not only expand their portfolios but also contribute to the broader economic environment.
\nFor all PYMNTS B2B coverage, subscribe to the daily\u00a0B2B Newsletter.
\nThe post Embracing a Specialist Approach Helps Lenders Overcome Small Business Difficulties appeared first on PYMNTS.com.
\n", "content_text": "Small businesses represent 99.9% of American firms, yet effectively financing them remains an ongoing challenge.\nSmall businesses are inherently risky \u2014 and many end up being short-lived operations. And while the demand for innovative lending solutions tailored for small and-medium-sized businesses (SMBs) continues to grow, traditional lenders, particularly large banks, frequently view SMB lending as resource-intensive and unprofitable, and as a result shy away from the space.\nBut with the news from the U.S. Census Bureau that almost 5.5 million new U.S. business applications were filed in 2023, breaking the 2021 record of 5.4 million, capturing the opportunity this represents for smaller banks and community lenders like credit unions is top of mind for those financial institutions\u2019 executives.\nAfter all, SMB lending is a multifaceted puzzle, not a commodifiable offering \u2014 which is why community financial institutions are uniquely positioned to capture the small business lending market. With an inherent understanding of their local economies and a personal touch that larger banks often lack, these lenders can find themselves with a competitive edge in their local markets.\nAnd when it comes to the specialized needs of SMBs, taking a specialized \u2014 rather than generalized \u2014 approach to lending can be the strategy that ultimately pays off.\nRead more: The $150B Question: Can Community FIs Capture the SMB Digital Banking Opportunity?\nThe Importance of Embracing Digital Innovation\nTo fully seize the SMB lending opportunity, alternative lenders must themselves embrace digital transformation.\nAs technology continues to evolve and industries become more specialized, the ability to understand and meet the unique needs of small businesses will be a key differentiator. Small businesses, especially startups, often lack the robust financial histories and credit profiles that lenders rely on to assess risk. The absence of substantial collateral and established cash flows makes it difficult for lenders to confidently gauge the likelihood of repayment. This perceived risk is exacerbated by economic downturns, which can disproportionately impact smaller enterprises.\nAs recent PYMNTS Intelligence noted, 71% of SMBs are experiencing\u00a0cash shortfalls.\nUnlike large corporations, small businesses exhibit diverse needs and business models. This diversity means that a one-size-fits-all approach to lending is inadequate. Each business may require tailored financial products, such as lines of credit, term loans, or equipment financing, each with different risk profiles and return potential.\nOnly about 8.5% of\u00a0SMBs\u00a0have found working capital loans from banks to be readily available, according to \u201cWhat\u2019s Next in Credit: Why SMBs Prefer Corporate Credit Cards for Short-Term Financing,\u201d a PYMNTS Intelligence and\u00a0Cross River\u00a0collaboration.\nMany small businesses do not have sophisticated financial systems or the ability to provide detailed, accurate financial statements. This creates information asymmetry, where lenders cannot accurately assess the health and potential of a business. This challenge is particularly acute for non-traditional or niche businesses that do not fit into standard industry categories.\nThe\u00a0PYMNTS Intelligence\u00a0report, \u201cThe $150B Question: Can Community FIs Capture the SMB Digital Banking Opportunity?,\u201d done in collaboration with\u00a0NCR Voyix, provides insights into the evolving financial landscape for SMBs and finds that many SMBs are ready to switch to institutions that offer modern digital tools.\nSee also:\u00a0How Businesses Leverage Working Capital Solutions to Drive Growth\nThe cost of underwriting and processing loans for small businesses is relatively high compared to the loan amounts. For traditional banks, this means lower profitability per loan, disincentivizing them from focusing on the small business segment.\nBut embracing a specialist approach allows lenders to offer SMBs customized financial products that meet their specific needs. This might include flexible repayment terms, working capital loans that align with seasonal cash flows or financing options that take into account the growth trajectory of a startup. Such tailored solutions can significantly improve the likelihood of a business succeeding and repaying its loan.\nJennifer Marriner, EVP,\u00a0GlobalAcceptance Solutions at\u00a0Mastercard, told PYMNTS that SMBs are a significant focus within the embedded finance landscape. She noted that SMBs are particularly attracted to embedded finance as it offers a straightforward way to access financial services through the platforms\u00a0that they\u00a0already use for other business operations, such as accounting and inventory management.\nThe difficulties associated with small business lending are well-documented, but they are not insurmountable. A specialist approach, characterized by industry expertise, advanced data analytics, customized solutions and strong relationships, offers a viable path forward. And by focusing on the needs of small business owners and leveraging technology, lenders can not only expand their portfolios but also contribute to the broader economic environment.\nFor all PYMNTS B2B coverage, subscribe to the daily\u00a0B2B Newsletter.\nThe post Embracing a Specialist Approach Helps Lenders Overcome Small Business Difficulties appeared first on PYMNTS.com.", "date_published": "2024-08-01T17:06:18-04:00", "date_modified": "2024-08-01T22:06:36-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2023/11/loan-demand.jpg", "tags": [ "B2B", "B2B Payments", "banking", "Banks", "business loans", "Census Bureau", "commercial payments", "credit unions", "Lending", "loans", "MasterCard", "News", "PYMNTS Intelligence", "PYMNTS News", "Small Business funding", "Small business lending", "SMBs", "working capital" ] }, { "id": "https://www.pymnts.com/?p=2019527", "url": "https://www.pymnts.com/smbs/2024/70-percent-of-small-businesses-want-better-cash-management-services-from-banks/", "title": "70% of Small Businesses Want Better Cash Management Services From Banks", "content_html": "Small to mid-sized businesses (SMBs) are contending with a perfect storm of financial difficulties: outdated payment systems, persistent inflation and delayed payments.
\nThese issues disrupt cash flow and hinder growth, exacerbated by inefficient manual accounting practices and reliance on paper payments. As inflation pressures margins and payment delays become more frequent, SMBs are under intense pressure to modernize their financial operations.
\nIn response, SMBs are seeking banking partners that offer digital solutions to meet their evolving needs. Frustrated with traditional banks and credit unions that fail to provide sophisticated digital tools, many small business owners are prepared to switch to institutions that offer better financial management solutions.
\nCommunity banks and credit unions have a prime opportunity to step in by providing digital services and partnering with FinTechs to enhance their offerings. Those that can adapt and deliver these digital solutions will be well-positioned to secure and retain SMB clients.
\nA recent PYMNTS Intelligence report, The $150B Question: Can Community FIs Capture the SMB Digital Banking Opportunity?, in collaboration with NCR Voyix, provides insights into the evolving financial landscape for SMBs.\u00a0
\nFinancial Shortfalls Plague SMBs
\nSMBs are experiencing financial strain from late payments, inflation, and antiquated payment systems \u2014 delayed payments average 29.1 days, exacerbating cash flow issues.
\nWith 76% of SMBs under $10 million in revenue facing inflationary pressures and 71% experiencing cash shortfalls, many resort to personal savings or loans to survive. Outdated manual processes, including paper payments, further complicate financial management and hinder efficiency, underscoring the need for digital solutions.
\nSMBs Seek Digital Remedies for Cash Flow Pain
\nFrustrated with their current banking relationships, many SMBs are ready to switch to institutions that offer modern digital tools. Over 70% of SMBs are interested in comprehensive cash management services, and 90% demand seamless digital payment options.
\nAs dissatisfaction with traditional banking increases, community banks and credit unions face pressure to provide digital solutions to retain clients and capture a larger share of the $150 billion SMB banking market.
\nFrom Traditional Banks to Trusted Advisers
\nTo meet SMBs\u2019 evolving needs, community banks and credit unions must embrace digital transformation and forge partnerships with FinTech firms. By collaborating with technology providers, smaller financial institutions can enhance their offerings, accelerate innovation, and improve customer experiences.
\nThis strategic shift enables community banks to transform from basic service providers into financial partners, addressing the specific needs of SMBs and securing long-term client loyalty.
\nLooking ahead, community banks and credit unions face a pivotal moment: the chance to redefine their role to indispensable digital partner for SMBs.\u00a0
\nThe post 70% of Small Businesses Want Better Cash Management Services From Banks appeared first on PYMNTS.com.
\n", "content_text": "Small to mid-sized businesses (SMBs) are contending with a perfect storm of financial difficulties: outdated payment systems, persistent inflation and delayed payments. \nThese issues disrupt cash flow and hinder growth, exacerbated by inefficient manual accounting practices and reliance on paper payments. As inflation pressures margins and payment delays become more frequent, SMBs are under intense pressure to modernize their financial operations.\nIn response, SMBs are seeking banking partners that offer digital solutions to meet their evolving needs. Frustrated with traditional banks and credit unions that fail to provide sophisticated digital tools, many small business owners are prepared to switch to institutions that offer better financial management solutions.\nCommunity banks and credit unions have a prime opportunity to step in by providing digital services and partnering with FinTechs to enhance their offerings. Those that can adapt and deliver these digital solutions will be well-positioned to secure and retain SMB clients.\nA recent PYMNTS Intelligence report, The $150B Question: Can Community FIs Capture the SMB Digital Banking Opportunity?, in collaboration with NCR Voyix, provides insights into the evolving financial landscape for SMBs.\u00a0\nFinancial Shortfalls Plague SMBs\nSMBs are experiencing financial strain from late payments, inflation, and antiquated payment systems \u2014 delayed payments average 29.1 days, exacerbating cash flow issues. \nWith 76% of SMBs under $10 million in revenue facing inflationary pressures and 71% experiencing cash shortfalls, many resort to personal savings or loans to survive. Outdated manual processes, including paper payments, further complicate financial management and hinder efficiency, underscoring the need for digital solutions.\nSMBs Seek Digital Remedies for Cash Flow Pain\nFrustrated with their current banking relationships, many SMBs are ready to switch to institutions that offer modern digital tools. Over 70% of SMBs are interested in comprehensive cash management services, and 90% demand seamless digital payment options. \nAs dissatisfaction with traditional banking increases, community banks and credit unions face pressure to provide digital solutions to retain clients and capture a larger share of the $150 billion SMB banking market.\nFrom Traditional Banks to Trusted Advisers\nTo meet SMBs\u2019 evolving needs, community banks and credit unions must embrace digital transformation and forge partnerships with FinTech firms. By collaborating with technology providers, smaller financial institutions can enhance their offerings, accelerate innovation, and improve customer experiences. \nThis strategic shift enables community banks to transform from basic service providers into financial partners, addressing the specific needs of SMBs and securing long-term client loyalty.\nLooking ahead, community banks and credit unions face a pivotal moment: the chance to redefine their role to indispensable digital partner for SMBs.\u00a0\nThe post 70% of Small Businesses Want Better Cash Management Services From Banks appeared first on PYMNTS.com.", "date_published": "2024-07-31T04:00:54-04:00", "date_modified": "2024-07-30T22:08:31-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/07/small-businesses-financial-services.jpg", "tags": [ "community banks", "credit unions", "Digital Banking", "Digital Payments", "Featured News", "News", "PYMNTS Intelligence", "PYMNTS News", "small businesses", "SMBs", "The Data Point" ] }, { "id": "https://www.pymnts.com/?p=2017672", "url": "https://www.pymnts.com/smbs/2024/cuba-bans-small-business-from-using-us-bank-accounts/", "title": "Cuba Bans Small Business From\u00a0Using US Bank Accounts", "content_html": "Cuba has reportedly banned its small businesses from using U.S. bank accounts, just weeks after the Biden administration allowed Cubans to use the banking system.
\nHavana\u2019s decision comes at a time when the country is having its worst economic crisis since the collapse of the Soviet Union and is dealing with inflation that hit 31% last year, Bloomberg\u00a0reported Friday (July 26).
\nCuba aims to keep dollars within the country, according to the report.
\nNow, the government says all payments to international suppliers must be made through local banks, Bloomberg reported
\nThis move is part of the Cuban government\u2019s larger crackdown on the private sector, per the report.
\nCuba began allowing the establishment of small- to medium-sized businesses (SMBs) in 2021, and more than 11,000 such businesses have been formed since then, according to the report.
\nEntrepreneurs interviewed by Bloomberg said that many small businesses need offshore accounts because they\u2019re\u00a0unable to get hard currency in the local market, and that some believe the government wants to drive them out of business.
\nThe Biden administration announced the new regulations allowing entrepreneurs in Cuba to open bank accounts in the United States in May, aiming to support the country\u2019s growing private sector, the New York Times reported at the time.
\nThat marked the first time Cuban entrepreneurs were allowed to open U.S. bank accounts amid the long-standing embargo the U.S. has imposed on the country, according to the report.
\nWhen announcing the amended regulations in May, the Treasury Department said in a\u00a0press release: \u201cThese regulatory amendments update and clarify authorizations in support of internet-based services to promote internet freedom in Cuba, support independent Cuban private sector entrepreneurs, and expand access to certain financial services for the Cuban people.\u201d
\nIn an earlier attempt to address effects of Cuba\u2019s\u00a0economic crisis, the Cuban Central Bank issued regulations in August that put a limit of 5,000 pesos on cash transactions between state and private businesses and banned those organizations from using ATMs.
\nThese measures aimed to encourage the use of an electronic form of payment, targeting runaway inflation and a large off-the-books economy that has developed amid the country\u2019s economic crisis.
\nThe post Cuba Bans Small Business From\u00a0Using US Bank Accounts appeared first on PYMNTS.com.
\n", "content_text": "Cuba has reportedly banned its small businesses from using U.S. bank accounts, just weeks after the Biden administration allowed Cubans to use the banking system.\nHavana\u2019s decision comes at a time when the country is having its worst economic crisis since the collapse of the Soviet Union and is dealing with inflation that hit 31% last year, Bloomberg\u00a0reported Friday (July 26).\nCuba aims to keep dollars within the country, according to the report.\nNow, the government says all payments to international suppliers must be made through local banks, Bloomberg reported\nThis move is part of the Cuban government\u2019s larger crackdown on the private sector, per the report.\nCuba began allowing the establishment of small- to medium-sized businesses (SMBs) in 2021, and more than 11,000 such businesses have been formed since then, according to the report.\nEntrepreneurs interviewed by Bloomberg said that many small businesses need offshore accounts because they\u2019re\u00a0unable to get hard currency in the local market, and that some believe the government wants to drive them out of business.\nThe Biden administration announced the new regulations allowing entrepreneurs in Cuba to open bank accounts in the United States in May, aiming to support the country\u2019s growing private sector, the New York Times reported at the time.\nThat marked the first time Cuban entrepreneurs were allowed to open U.S. bank accounts amid the long-standing embargo the U.S. has imposed on the country, according to the report.\nWhen announcing the amended regulations in May, the Treasury Department said in a\u00a0press release: \u201cThese regulatory amendments update and clarify authorizations in support of internet-based services to promote internet freedom in Cuba, support independent Cuban private sector entrepreneurs, and expand access to certain financial services for the Cuban people.\u201d\nIn an earlier attempt to address effects of Cuba\u2019s\u00a0economic crisis, the Cuban Central Bank issued regulations in August that put a limit of 5,000 pesos on cash transactions between state and private businesses and banned those organizations from using ATMs.\nThese measures aimed to encourage the use of an electronic form of payment, targeting runaway inflation and a large off-the-books economy that has developed amid the country\u2019s economic crisis.\nThe post Cuba Bans Small Business From\u00a0Using US Bank Accounts appeared first on PYMNTS.com.", "date_published": "2024-07-26T19:49:31-04:00", "date_modified": "2024-07-28T22:06:00-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/07/Cuba-SMBs-banking.jpg", "tags": [ "B2B", "B2B Payments", "banking", "Cash", "commercial payments", "cross-border payments", "Cuba", "inflation", "international", "News", "PYMNTS News", "remittances", "small businesses", "SMBs", "What's Hot", "What's Hot In B2B" ] }, { "id": "https://www.pymnts.com/?p=2017575", "url": "https://www.pymnts.com/smbs/2024/sage-enhances-payment-processing-for-smbs-with-stripe-integration/", "title": "Sage Enhances Payment Processing for SMBs\u00a0With Stripe Integration", "content_html": "Sage\u00a0and\u00a0Stripe have partnered to help improve cashflow management and payment processing for small- to medium-sized businesses (SMBs).
\nStripe\u2019s financial infrastructure platform for businesses will be integrated into Sage\u2019s solutions for SMBs, providing Sage customers with more ways to pay and get paid, the companies said in a Thursday (July 25) press release.
\nThe integration is currently available through\u00a0Sage Accounting,\u00a0Sage 50,\u00a0Sage 100,\u00a0Sage 200 and Sage Connect, though the availability varies by country, according to the release.
\n\u201cWe are committed to harnessing the power of technology to drive innovation, enhance efficiency and pave the way for growth,\u201d Sage Chief Product Officer\u00a0Walid Abu-Hadba said in the release.
\nOne of the benefits of this partnership is that SMBs will be able to make it easier for their customers to review their accounts and pay by using Sage Connect\u2019s customer account portal and\u00a0Stripe Checkout, according to the release.
\nSMBs will also be able to accept multiple payment methods from customers, including digital wallets, cards and bank transfers, the release said.
\nThey will also be able to collect payments online and in person without terminal hardware, provide a safe and secure payment experience that leverages Stripe\u2019s security protocols and compliance with global financial regulations, and streamline the payment and reconciliation process with bank transfers, per the release.
\n\u201cSage understands the importance of innovating for its customers, and we\u2019re thrilled to be part of its journey,\u201d\u00a0Eileen O\u2019Mara, chief revenue officer at Stripe, said in the release. \u201cStripe is building a suite of software-defined financial services to enable leading platforms like Sage to provide integrated features that make their customers\u2019 lives easier.\u201d
\nIn another collaboration, Sage teamed up with\u00a0Amazon Web Services (AWS) in February to help SMBs optimize their operations with\u00a0generative artificial intelligence (AI). In that partnership, Sage will use\u00a0Amazon Bedrock and\u00a0Amazon Lex to develop a domain-specific large language model (LLM) for accounting and compliance purposes.
\nIn September, Sage partnered with Swoop, a FinTech company specializing in funding solutions, to provide\u00a0business funding and cost-savings solutions. Together, the companies aim to provide SMBs and their trusted advisors with easy access to a wide range of funding activities.
\nThe post Sage Enhances Payment Processing for SMBs\u00a0With Stripe Integration appeared first on PYMNTS.com.
\n", "content_text": "Sage\u00a0and\u00a0Stripe have partnered to help improve cashflow management and payment processing for small- to medium-sized businesses (SMBs).\nStripe\u2019s financial infrastructure platform for businesses will be integrated into Sage\u2019s solutions for SMBs, providing Sage customers with more ways to pay and get paid, the companies said in a Thursday (July 25) press release.\nThe integration is currently available through\u00a0Sage Accounting,\u00a0Sage 50,\u00a0Sage 100,\u00a0Sage 200 and Sage Connect, though the availability varies by country, according to the release.\n\u201cWe are committed to harnessing the power of technology to drive innovation, enhance efficiency and pave the way for growth,\u201d Sage Chief Product Officer\u00a0Walid Abu-Hadba said in the release.\nOne of the benefits of this partnership is that SMBs will be able to make it easier for their customers to review their accounts and pay by using Sage Connect\u2019s customer account portal and\u00a0Stripe Checkout, according to the release.\nSMBs will also be able to accept multiple payment methods from customers, including digital wallets, cards and bank transfers, the release said.\nThey will also be able to collect payments online and in person without terminal hardware, provide a safe and secure payment experience that leverages Stripe\u2019s security protocols and compliance with global financial regulations, and streamline the payment and reconciliation process with bank transfers, per the release.\n\u201cSage understands the importance of innovating for its customers, and we\u2019re thrilled to be part of its journey,\u201d\u00a0Eileen O\u2019Mara, chief revenue officer at Stripe, said in the release. \u201cStripe is building a suite of software-defined financial services to enable leading platforms like Sage to provide integrated features that make their customers\u2019 lives easier.\u201d\nIn another collaboration, Sage teamed up with\u00a0Amazon Web Services (AWS) in February to help SMBs optimize their operations with\u00a0generative artificial intelligence (AI). In that partnership, Sage will use\u00a0Amazon Bedrock and\u00a0Amazon Lex to develop a domain-specific large language model (LLM) for accounting and compliance purposes.\nIn September, Sage partnered with Swoop, a FinTech company specializing in funding solutions, to provide\u00a0business funding and cost-savings solutions. Together, the companies aim to provide SMBs and their trusted advisors with easy access to a wide range of funding activities.\nThe post Sage Enhances Payment Processing for SMBs\u00a0With Stripe Integration appeared first on PYMNTS.com.", "date_published": "2024-07-26T15:29:27-04:00", "date_modified": "2024-07-28T22:04:15-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2023/01/Stripe-payments-processor.jpg", "tags": [ "B2B", "B2B Payments", "commercial payments", "News", "partnerships", "Payment Methods", "payments", "PYMNTS News", "Sage", "small businesses", "SMBs", "Stripe", "What's Hot", "What's Hot In B2B" ] }, { "id": "https://www.pymnts.com/?p=2016329", "url": "https://www.pymnts.com/smbs/2024/embedded-lending-finds-traction-with-consumers-and-smbs/", "title": "Embedded Lending Finds Traction With Consumers and SMBs", "content_html": "Embedded lending promises users convenient, streamlined access to financing for specific expenses from within merchant, business and other platforms.
\nPYMNTS Intelligence finds that embedded lending isn\u2019t fully living up to the promise yet. Nonetheless, many individuals, microbusinesses and small businesses (MSBs) use it. In fact, using this type of lending in the past correlates with a strong interest in switching providers to access these options.
\nThis interest persists even though many users encounter friction applying for and using these products. What factors keep users coming back?
\n\u201cThe Embedded Lending Opportunity: U.S. Edition,\u201d a PYMNTS Intelligence\u2019s latest report commissioned by Visa, explores the state of play for embedded lending for both the consumer and MSB segments in the U.S. It draws on a 360-degree study of lenders and end users, conducted between Jan. 13 and March 15, 2024.
\nThis report contains crucial information that providers need to leverage embedded lending\u2019s opportunities and mitigate its challenges.
\nConsumers and MSBs that have used these products are likely to keep using them. In fact, despite frictions, many say they would switch providers to be able to access them. Download the report to learn more about how providers that address these frictions and concerns stand to profit.
\nThe post Embedded Lending Finds Traction With Consumers and SMBs appeared first on PYMNTS.com.
\n", "content_text": "Download the Data Brief\n \n The Embedded Lending Opportunity: U.S. Edition\n \n \n \n \n \n \n [contact-form-7]\n \n \n \n \n \n\nEmbedded lending promises users convenient, streamlined access to financing for specific expenses from within merchant, business and other platforms.\nPYMNTS Intelligence finds that embedded lending isn\u2019t fully living up to the promise yet. Nonetheless, many individuals, microbusinesses and small businesses (MSBs) use it. In fact, using this type of lending in the past correlates with a strong interest in switching providers to access these options.\nThis interest persists even though many users encounter friction applying for and using these products. What factors keep users coming back?\n\u201cThe Embedded Lending Opportunity: U.S. Edition,\u201d a PYMNTS Intelligence\u2019s latest report commissioned by Visa, explores the state of play for embedded lending for both the consumer and MSB segments in the U.S. It draws on a 360-degree study of lenders and end users, conducted between Jan. 13 and March 15, 2024.\nThis report contains crucial information that providers need to leverage embedded lending\u2019s opportunities and mitigate its challenges.\nInside \u201cThe Embedded Lending Opportunity: U.S. Edition\u201d\n\nWhat embedded lending is and how does it differ from other types of credit\nAn exploration of its appeal to U.S. consumers and MSBs\nThe role cash flow plays in driving consumer and MSB interest in this type of lending\nWhy lenders need to offer compelling products to differentiate themselves in this expanding market\nAn overview of frictions consumers and MSBs encounter when applying for and using this type of lending\nHow friction rates compare to those of other types of lending\nDemographic information about which consumers and MSBs are willing to switch providers to access these lending options\n\nConsumers and MSBs that have used these products are likely to keep using them. In fact, despite frictions, many say they would switch providers to be able to access them. Download the report to learn more about how providers that address these frictions and concerns stand to profit.\nThe post Embedded Lending Finds Traction With Consumers and SMBs appeared first on PYMNTS.com.", "date_published": "2024-07-25T04:00:29-04:00", "date_modified": "2024-07-24T19:44:49-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/07/embedded-lending-microbusinesses-united-states.jpg", "tags": [ "business growth", "cash flow", "embedded finance", "embedded lending", "Main Feature", "Microbusinesses", "News", "PYMNTS Intelligence", "PYMNTS News", "PYMNTS Study", "small businesses", "SMBs", "united states", "Visa" ] }, { "id": "https://www.pymnts.com/?p=2013391", "url": "https://www.pymnts.com/smbs/2024/white-house-ramps-up-small-business-working-capital-offerings/", "title": "White House Ramps Up Small Business Working Capital Offerings", "content_html": "When it comes to the business landscape, more money commonly equals, or creates, more opportunities.
\nAnd with the news that the\u00a0Small Business Administration\u00a0(SBA) has started soliciting insights on a new\u00a0pilot program within the 7(a) Loan Program designed to support small and medium-sized businesses (SMBs), putting working capital to work is top of mind for SMBs.
\nThe Working Capital Pilot Program (WCP), as detailed by the SBA, aims to address the need for accessible and flexible working capital among SMBs by providing short-term loans. These loans may be approved up to $5 million and used to back both international and domestic transactions.
\nUnder the WCP, lenders may authorize a loan term of up to 60 months and must pay a guarantee fee to SBA for each loan made. The guidelines note that 7(a) lenders making WCP loans of $150,000 or less will have an 85% SBA guaranty, and WCP loans greater than $150,000 will have a 75% SBA guaranty.
\n\u201cAs small businesses grow, they require access to working capital. Working capital is most economically delivered through a line of credit and allows businesses to take on new opportunities in a way that a term loan cannot,\u201d said Isabella Casillas Guzman, SBA administrator, in a statement.
\nThe SBA has said it expects to approve around 270 WCP loans, with a total value of about $337 million, during 2025. The program itself is set to take effect Aug. 1 and expire by the end of July 2027.
\nThe launch comes as U.S. merchants\u2019\u00a0optimism\u00a0is low, which means that effective\u00a0management of working capital\u00a0is more important than ever for businesses that hope to grow.
\nRead more: How Businesses Leverage Working Capital Solutions to Drive Growth
\nThe SBA\u2019s WCP program is designed to be more attractive to both lenders and borrowers than the agency\u2019s existing products. The SBA first announced the\u00a0pilot program\u00a0in June, and comments on the program are due by Aug. 14.
\nUnlike traditional loan structures, the WCP Program offers a deferred payment option, allowing businesses to postpone their first loan payment. This feature is designed to provide SMBs with the breathing room they need to stabilize their operations before tackling repayment obligations.
\nAfter all, stabilizing operations can include things like covering costs such as payroll, inventory and other day-to-day expenditures that are crucial for maintaining and growing a business, as well as making strategic long-term investments into newer technologies and digital solutions.
\nIn addition to other uses, loan proceeds under the program may be used to provide a temporary advance against state and federal tax credits or rebates, the SBA noted.
\nThe SBA isn\u2019t alone in its SMB focused initiatives. The\u00a0British Business Bank, the U.K. government\u2019s economic development bank, has itself launched a program July 8 designed to support access to finance for smaller U.K. businesses.
\nThe British Business Bank has\u00a0accredited 41 lenders for the program and will accredit more in the coming weeks. Twenty of these lenders are now open for applications, while the remainder are putting in place the operations they need to start lending under the program.
\nRead more: Embedded Lending Puts SMBs at Center of Financial Services Landscape
\nStill, improving SMB access to working capital solutions that fit their needs represents a puzzle that banks and other lenders have long struggled to solve.
\nOnly about 8.5% of\u00a0SMBs have found working capital loans from banks to be readily available, according to \u201cWhat\u2019s Next in Credit: Why SMBs Prefer Corporate Credit Cards for Short-Term Financing,\u201d a PYMNTS Intelligence and\u00a0Cross River collaboration.
\n\u201cThe number one pain point for small businesses is access to capital,\u201d Luke Voiles, CEO at\u00a0Pipe, told PYMNTS in June. \u201cIt\u2019s a powerful thing to give someone that has never had access to capital, but has an amazing small business. \u2026 It can be a huge multiplier.\u201d
\nBut the opportunity to crack the SMB lending space remains a big one, and the SBA offerings will also face competition from the private sector. Just Tuesday (July 16), FIS\u00a0launched a solution\u00a0designed\u00a0to help banks source, underwrite and fund loans to SMBs. The new SMB Digital Lending solution was created in partnership with small business financial solutions technology platform\u00a0Lendio.
\nFor all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.
\nThe post White House Ramps Up Small Business Working Capital Offerings appeared first on PYMNTS.com.
\n", "content_text": "When it comes to the business landscape, more money commonly equals, or creates, more opportunities. \nAnd with the news that the\u00a0Small Business Administration\u00a0(SBA) has started soliciting insights on a new\u00a0pilot program within the 7(a) Loan Program designed to support small and medium-sized businesses (SMBs), putting working capital to work is top of mind for SMBs. \nThe Working Capital Pilot Program (WCP), as detailed by the SBA, aims to address the need for accessible and flexible working capital among SMBs by providing short-term loans. These loans may be approved up to $5 million and used to back both international and domestic transactions.\nUnder the WCP, lenders may authorize a loan term of up to 60 months and must pay a guarantee fee to SBA for each loan made. The guidelines note that 7(a) lenders making WCP loans of $150,000 or less will have an 85% SBA guaranty, and WCP loans greater than $150,000 will have a 75% SBA guaranty.\n\u201cAs small businesses grow, they require access to working capital. Working capital is most economically delivered through a line of credit and allows businesses to take on new opportunities in a way that a term loan cannot,\u201d said Isabella Casillas Guzman, SBA administrator, in a statement.\nThe SBA has said it expects to approve around 270 WCP loans, with a total value of about $337 million, during 2025. The program itself is set to take effect Aug. 1 and expire by the end of July 2027.\nThe launch comes as U.S. merchants\u2019\u00a0optimism\u00a0is low, which means that effective\u00a0management of working capital\u00a0is more important than ever for businesses that hope to grow.\nRead more: How Businesses Leverage Working Capital Solutions to Drive Growth\nMaking Working Capital Have Impact\nThe SBA\u2019s WCP program is designed to be more attractive to both lenders and borrowers than the agency\u2019s existing products. The SBA first announced the\u00a0pilot program\u00a0in June, and comments on the program are due by Aug. 14.\nUnlike traditional loan structures, the WCP Program offers a deferred payment option, allowing businesses to postpone their first loan payment. This feature is designed to provide SMBs with the breathing room they need to stabilize their operations before tackling repayment obligations.\nAfter all, stabilizing operations can include things like covering costs such as payroll, inventory and other day-to-day expenditures that are crucial for maintaining and growing a business, as well as making strategic long-term investments into newer technologies and digital solutions. \nIn addition to other uses, loan proceeds under the program may be used to provide a temporary advance against state and federal tax credits or rebates, the SBA noted. \nThe SBA isn\u2019t alone in its SMB focused initiatives. The\u00a0British Business Bank, the U.K. government\u2019s economic development bank, has itself launched a program July 8 designed to support access to finance for smaller U.K. businesses. \nThe British Business Bank has\u00a0accredited 41 lenders for the program and will accredit more in the coming weeks. Twenty of these lenders are now open for applications, while the remainder are putting in place the operations they need to start lending under the program.\nRead more: Embedded Lending Puts SMBs at Center of Financial Services Landscape\nSMBs Need Better Financing Products\nStill, improving SMB access to working capital solutions that fit their needs represents a puzzle that banks and other lenders have long struggled to solve.\nOnly about 8.5% of\u00a0SMBs have found working capital loans from banks to be readily available, according to \u201cWhat\u2019s Next in Credit: Why SMBs Prefer Corporate Credit Cards for Short-Term Financing,\u201d a PYMNTS Intelligence and\u00a0Cross River collaboration.\n\u201cThe number one pain point for small businesses is access to capital,\u201d Luke Voiles, CEO at\u00a0Pipe, told PYMNTS in June. \u201cIt\u2019s a powerful thing to give someone that has never had access to capital, but has an amazing small business. \u2026 It can be a huge multiplier.\u201d\nBut the opportunity to crack the SMB lending space remains a big one, and the SBA offerings will also face competition from the private sector. Just Tuesday (July 16), FIS\u00a0launched a solution\u00a0designed\u00a0to help banks source, underwrite and fund loans to SMBs. The new SMB Digital Lending solution was created in partnership with small business financial solutions technology platform\u00a0Lendio.\nFor all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.\nThe post White House Ramps Up Small Business Working Capital Offerings appeared first on PYMNTS.com.", "date_published": "2024-07-18T19:06:44-04:00", "date_modified": "2024-07-18T19:06:44-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/07/small-business-working-capital.jpg", "tags": [ "B2B", "B2B Payments", "commercial payments", "Isabella Casillas Guzman", "News", "PYMNTS News", "SBA", "small business", "Small Business Administration", "SMBs", "working capital", "Working Capital Pilot Program" ] }, { "id": "https://www.pymnts.com/?p=2011959", "url": "https://www.pymnts.com/smbs/2024/9spokes-launches-cashflow-product-for-financial-institutions-serving-smbs/", "title": "9Spokes Launches Cashflow Product for Financial Institutions Serving SMBs", "content_html": "Global data platform\u00a09Spokes has launched a new product designed to give small- medium-sized businesses (SMBs) automated, predictive cashflow management and forecasting capabilities.
\nThe new Cashflow product is designed for integration within financial organizations\u2019 digital platforms and is now available to financial institutions and FinTech firms globally, the company said in a Tuesday (July 16)\u00a0press release.
\n\u201cThe financial landscape is evolving, necessitating tools that harness open banking data to drive strategic insight,\u201d\u00a0Kevin Phalen, executive chairman\u00a0of 9Spokes, said in the release. \u201cOur Cashflow product empowers SMBs and financial organizations with the automated, data-driven capabilities needed to navigate and thrive in this changing environment.\u201d
\nThis solution is designed to simplify tasks for the 70% of SMBs that operate with less than four months of cash reserves and the 60% that spend five hours weekly managing multiple cash flow tools, according to the release.
\nBy leveraging open banking and open data, Cashflow provides SMBs with a comprehensive view of their financial standings that includes multiple bank accounts and various providers, the release said.
\nThe product also uses machine-learning algorithms to automatically pull historical cash balance data; aggregate cash balance history, forecasts\u00a0and other data from multiple sources; and provide SMBs with a complete view of their current and future cashflow, the release said.
\nWith this white-labelled solution, financial organizations can offer this tool under their own brand, per the release. Cashflow is pre-built and configurable to meet the needs of financial organizations and their SMBs.
\nIn another recent development in this space,\u00a0Mimo\u00a0said in April that it raised 15.5 million pounds (about $19.4 million) to launch its\u00a0financial management platform for SMBs and accountants. This platform is designed to help users pay invoices, make or chase international payments and manage cash flow, without having to use multiple apps and spreadsheets.
\nIn February,\u00a0Xero said it would enhance the accounts payable (AP) capabilities of its global\u00a0small business platform for its U.S. customers through a partnership with\u00a0BILL, a financial operations platform for SMBs. This partnership brings a bill pay solution from BILL directly into the Xero platform, helping SMBs overcome the challenges they face in paying bills and managing cash flow efficiently.
\nThe post 9Spokes Launches Cashflow Product for Financial Institutions Serving SMBs appeared first on PYMNTS.com.
\n", "content_text": "Global data platform\u00a09Spokes has launched a new product designed to give small- medium-sized businesses (SMBs) automated, predictive cashflow management and forecasting capabilities.\nThe new Cashflow product is designed for integration within financial organizations\u2019 digital platforms and is now available to financial institutions and FinTech firms globally, the company said in a Tuesday (July 16)\u00a0press release.\n\u201cThe financial landscape is evolving, necessitating tools that harness open banking data to drive strategic insight,\u201d\u00a0Kevin Phalen, executive chairman\u00a0of 9Spokes, said in the release. \u201cOur Cashflow product empowers SMBs and financial organizations with the automated, data-driven capabilities needed to navigate and thrive in this changing environment.\u201d\nThis solution is designed to simplify tasks for the 70% of SMBs that operate with less than four months of cash reserves and the 60% that spend five hours weekly managing multiple cash flow tools, according to the release.\nBy leveraging open banking and open data, Cashflow provides SMBs with a comprehensive view of their financial standings that includes multiple bank accounts and various providers, the release said.\nThe product also uses machine-learning algorithms to automatically pull historical cash balance data; aggregate cash balance history, forecasts\u00a0and other data from multiple sources; and provide SMBs with a complete view of their current and future cashflow, the release said.\nWith this white-labelled solution, financial organizations can offer this tool under their own brand, per the release. Cashflow is pre-built and configurable to meet the needs of financial organizations and their SMBs.\nIn another recent development in this space,\u00a0Mimo\u00a0said in April that it raised 15.5 million pounds (about $19.4 million) to launch its\u00a0financial management platform for SMBs and accountants. This platform is designed to help users pay invoices, make or chase international payments and manage cash flow, without having to use multiple apps and spreadsheets.\nIn February,\u00a0Xero said it would enhance the accounts payable (AP) capabilities of its global\u00a0small business platform for its U.S. customers through a partnership with\u00a0BILL, a financial operations platform for SMBs. This partnership brings a bill pay solution from BILL directly into the Xero platform, helping SMBs overcome the challenges they face in paying bills and managing cash flow efficiently.\nThe post 9Spokes Launches Cashflow Product for Financial Institutions Serving SMBs appeared first on PYMNTS.com.", "date_published": "2024-07-16T19:15:57-04:00", "date_modified": "2024-07-16T19:15:57-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/07/9Spokes-SMBs-spend-management.jpg", "tags": [ "9Spokes", "B2B", "B2B Payments", "Cash", "cash flow", "commercial payments", "News", "PYMNTS News", "small businesses", "SMBs", "spend management", "What's Hot", "What's Hot In B2B", "working capital" ] } ] }