Despite the nickname given to this segment, small businesses are a big part of the American economy.
The U.S. Small Business Administration (SBA) is also celebrating. National Small Business Week Starting Sunday (April 28), the staying power of entrepreneurship in the United States has become a top priority for both small and medium-sized businesses (SMBs) as well as the solution providers and financial institutions that serve them.
“Small businesses are the powerhouse of our economy and the heart and soul of our communities. They employ nearly half of our private sector workers and contribute to every industry. Because they grow Providing them with what they need is one of the best investments our country can make,” the White House said in a Friday (April 26) article. statement.
After all, small businesses employ only a few or even a few dozen people, rather than the thousands of employees that large corporations and corporations boast. compensate It accounts for 40% of the U.S. economy and 99.9% of all U.S. businesses.
However, this critical business sector faces myriad challenges, from economic uncertainty to regulatory burdens, access to capital, and managing the growing imperatives of digital transformation.
So as National Small Business Week approaches, PYMNTS is taking a look at the state of small businesses.
Also read: Young small businesses cannot find sufficient business capital
Ensuring access to capital for small and medium-sized businesses
Securing funding to start or expand a business can be difficult, especially for businesses without established credit or collateral. Small businesses are the lifeblood of local economies, but they often find themselves on their own. are having difficulty securing Capital that needs to be invested for growth.
As stated in a White House announcement, “Family-owned businesses with only a few employees often need small loans of $100,000 or less, but not all banks offer loans. isn't it.”
“Underwriting for small and medium-sized businesses It’s not simple.” ryan rosetteCredible's co-founder and CEO explained to PYMNTS that while access to working capital is “essential” for small and medium-sized businesses, there is a gap in the market that alternative lenders need to fill.
PYMNTS Intelligence estimates that: Only about 8.5% of SMEs said they had easy access to working capital loans from banks. More than half of respondents said they would consider raising new funds for 2024. Data shows that more than 26% of businesses looking to raise new financing are considering using online lenders. Approximately one-third are thought to use a large national bank.
Without access to financing, small businesses alike can struggle with the day-to-day operational realities and investing in the future, making it difficult for them to enter new markets and compete with larger peers. It will be difficult.
Navigating complex regulations at the federal, state, and local levels can be a difficult and time-consuming task, especially for small businesses with limited resources.
For financial institutions, unique opportunity Strengthen the resilience of small businesses by providing customized financial tools and support, NCR Voices Chief Product Officer, Digital Banking doug brown In the new PYMNTS e-book, he says:Effect of uncertainty”
In addition to basic banking services, banks and credit unions can offer advanced features such as cash flow management, payroll functionality, and expense tracking. By integrating these features into their services, banking providers can help small business owners streamline their financial operations and make more informed decisions, Brown said.
Please also read: Open banking allows more small business data to be used in lending decisions
Investing in digital transformation has a big impact on small and medium-sized businesses
with cost of doing business the price of ~ keeps going up Main Street Small Businessinnovation and adaptability are increasingly important to staying competitive, moving from a reactive to a proactive posture.
“We have experienced the most unstable period macro environment …and many people think so. [SMBs] Now I'm starting to think about going on the offensive.” charles juVice President of Products enigmahe told PYMNTS in an interview posted in December.
By leveraging technology to streamline and modernize traditional processes, small businesses can increase efficiency, reduce manual errors, and increase prospects for growth.
Digital investments are especially important given the recent situation PYMNTS Intelligence This reveals that consumers have come to expect seamless digital convenience, but many small merchants are finding themselves not meeting those expectations.
”2024 Global Digital Shopping Index: SMB Edition”, a PYMNTS Intelligence study commissioned by visa acceptance solutionsfound that in the United States, small and medium-sized businesses “miss out on 55% of the features consumers want.”
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