Changing the Way Small Business Are Financed
One of the major problems many economies have had to deal with is that which concerns catering to the needs of small businesses in a changing business environment. The traditional model of new companies turning to banks for finance was limiting for most entrepreneurs.
Small business owners found it unbelievably hard to secure funding through a bank, with loan requests being declined for reasons ranging from insufficient collateral to economic concerns, and everything in-between. This made survival difficult, never mind expansion.
Thanks to new fintech firms, small and medium businesses can now access cheaper alternative financing and grow. The innovative ideas and new developments brought by fintech companies have changed the business sector and made it easier for startups to navigate the financial services landscape through the following ways:
Fintech enables small businesses to get the funding they need to expand. Peer-to-peer lending sites such as Funding Circle, LendGenius, and Kabbage provide microloans for business owners that often have difficulty finding lending support. This helps make it possible for small businesses to carry on their operations unhindered.
The requirements for getting approved by these companies are less restrictive than commercial banks. Fintech advances also attract lower interest rates, involve little to no paperwork, and do not require collateral. Add the convenience that they offer on top of that, and you will see just how far financial technology has brought us.
Expense Tracking and Electronic Invoicing
Another way that fintech removes the barriers that small businesses encounter when they try to expand is that it provides them with reliable expense monitoring solutions that are flexible enough to allow them to meet their business needs.
Fintech firms like Sage offer tools with which small-sized businesses can monitor all the money coming in and going out of the company’s accounts. This helps business owners to understand how much money is in the business at any point in time, as well as how that money is being spent. When a business can have a clear picture of its finances in this manner, it will find it easier to make informed financial decisions.
Further, fintech enables small businesses to automate invoicing, simplifying the accounting process as a result. This helps entrepreneurs to not only deal with cashflow challenges but also to maximize efficiency.
Provision of Digital Payment Options
Before now, one of the major problems for businesses that operate on a small scale is how to send money across international borders. The procedures for sending funds across borders was long and tedious. As a result, it discouraged clients from buying from overseas businesses. Fortunately, payment solutions like PayPal, Stripe, Venmo, Skrill, etc., now make it easier for small business owners to accept payments globally. This enables businesses to achieve international growth, as any customer can pay for items regardless of their location.
Fintech has contributed in no small measure to helping small-sized businesses to drive revenue and grow market share in a tough business environment by addressing the market failures that they encounter.
The ease with which organizations can access funding, track expenses and conduct business have significantly enhanced their ability to keep their finances in check, achieve growth, and measure results effectively.