Small businesses continuously struggle from fierce competition and inflexible funding before they reach a stage where they are stable and earn profits. A few decades ago, startups had limited options at their disposal to overcome these struggles. According to the 2019 report by CB Insights, 44% of employer firms said credit availability or securing funds for expansion was a challenge in the past year, and 60% of small business funding applicants received less financing than they applied for.
But now, there has been a paradigm shift in small business finance as fintech has come into being to offer a much-needed helping hand. Fintech – a perfect combination of finance and technology –is helping startup owners to manage financial irregularities and keep their businesses afloat.
Not so long ago, entrepreneurs were subjected to a rigorous screening process for getting their loan approved. They had to fill numerous forms, file tons of paperwork, visit the bank multiple times, provide lengthy documentation, and wait for numerous days, only to get the loan application denied because they failed to put up a strong case.
Fintech has streamlined the loan application process to accommodate flexibility and convenience. Fintech companies like MoneyTap offer line of credit to startups through an end-to-end digital process. You can apply for line of credit online and receive the approval status almost immediately. The eligibility criteria of these fintech lending platforms/apps for loan approvals are far more relaxed as compared to traditional banks. The gist of the matter is that fintech companies have addressed the finance needs of small and medium-sized businesses and made finance accessible to them.
- Online Purchase Processing
In the past, taking payments through credit cards required businesses to invest in expensive credit card machines and open a merchant account. Fintech financial companies like Stripe and PayPal have made it possible for entrepreneurs to pay creditors, transfer money, send invoices, and accept credit/debit payments without a merchant account. All these can be done via a computer or smartphones. The new wave in online payment processing is definitely in favour of small businesses because all they need to keep their transactions going is a right app and a smartphone.
- Mass Payments
Today, Internet businesses are on the rise, and they rely on affiliates and partners for advertising, and marketing. These businesses need to make mass payments, and they face a challenge because their affiliates and partners are spread all over the world, which means while making payments, they need to conform to the regulations in that country or region.
Tipalti, a fintech technology company, has come up with a SaaS solution to simplify the whole process. The service allows companies to make mass payments across the world while keeping the payers in compliance with the regulations.
Now that it is possible to make and receive payments online, it has also increased the risk of cybercrime. For small businesses, keeping the transactional data and client information secure from cybercrime required them to invest in an extensive cybersecurity system. The challenge here is that small businesses cannot afford these advanced security systems. But thanks to fintech, the risk can be reduced with much affordable fingerprint scanning and voice recognition technology.
- Customer Experience
Last, but definitely not least of fintech benefits, is the refined customer experience. Fintech companies are focused on delivering bespoke, transparent, and efficient customer service at every touch point of the customer journey.
Technologies like live chatbots have redefined customer service. These AI-enabled chatbots interact with customers, just like any human would, to handle smaller customer issues. The complex ones are redirected to human staff for better resolution. Thus, saving time and money, which are the most crucial aspects for small businesses.