Small businesses are the backbone of the economy. They create two out of every three new jobs, and account for more than half of all private sector employment.
Unfortunately, many small businesses don’t have access to the capital they need to grow and thrive. This is where financial firms can come in and help!
In this blog post, we’ll discuss how financial firms can help bridge the gap in small business lending.
Build Credit Infrastructures
One way financial firms can help is by building credit infrastructures that small businesses can tap into.
This could include developing new products and services that help small businesses track and improve their credit scores. It could also involve working with lenders to help them better understand the needs of small businesses.
Provide Technical Assistance
Another way financial firms can help is by providing technical assistance to small businesses.
This could involve helping them develop business plans, providing advice on financial management, and offering training on how to use financial products and services.
3. Sharpen Policies
Financial firms can help by sharpening their policies around small business lending.
This could involve developing new underwriting standards that better reflect the needs of small businesses. It could also involve increasing transparency around loan terms and fees, and working to make the application process simpler and more streamlined.
4. Digitise Solutions
In order to effectively tackle the gap in small business lending, financial firms need to digitise their solutions.
This means developing online platforms and mobile apps that small businesses can use to access financing. It also means offering digital products and services that make it easier for small businesses to manage their finances.
5. Lower Barriers to Entry
In addition to digitising their solutions, financial firms need to lower the barriers to entry for small businesses.
This could involve reducing the amount of collateral required for loans, or offering more flexible repayment terms. It could also involve working with government agencies to create incentives for small businesses to access financing.
6. Provide Appropriate Oversight
Financial firms also need to provide appropriate oversight of small business lending.
This means ensuring that loans are being made to businesses that have a viable plan for repayment. It also means monitoring lenders to make sure they are adhering to sound lending practices.
7. Advocate Supportive Policies
Another way financial firms can help is by advocating for policies that support small businesses.
This can include advocating for lower interest rates on loans, or for government programs that provide funding to small businesses.
8. Partner with Small Businesses
Financial firms can also help by partnering with small businesses.
This can involve investing in small businesses, or providing them with access to new markets and customers.
To learn more, get in touch with us today.
This blog was produced in collaboration with our sister company: Axies Accountants.