How Fintech is Helping Small Businesses in Good Times and Bad
Businesses of all sizes have used fintech for years to save time or grow. As a result, many SMBs rely on fintech every day to operate efficiently. In times of chaos, a business can even keep its head above water using fintech. Though this depends on the type of fintech.
For example, a new generation of alternate lenders let you secure crucial business credit without long paper-based applications. as a result, they don’t require supporting documentation or spending time on in-person meetings with prospective lenders. Small Business Trends connected with Jim Shehigian of P2Binvestor to hear why fintech matters to SMBs. And we also discussed examples of this broad term.
An Expert Explains
Fintech entrepreneur James Shehigian serves as chief commercial officer at P2Binvestor. There Shehigian focuses on partnerships, marketing, sales and leading strategic growth. He brings more than 30 years’ experience. This largely includes building and leading firms in the financial technology, banking, and wealth management industries. He possesses an extensive background in scaling successful startups. Shehigian and his family reside in Boulder, Colorado. There he enjoys trail running, cycling and flying. He holds a BA in Economics from Northwestern University.
* * * * *
Small Business Trends: When a small business hears the word ‘fintech’, what should they think?
Jim Shehigian: Fintech is permeating all aspects of business today. Fintech is changing how companies finance their operations, interact with their paying customers, and compensate their employees. Because many fintech applications increase transparency of pricing and speed of transactions, older business models that relied on opaque pricing and layers of middlemen are being supplanted.
This is particularly seen in retail sectors, withintegrated payment and fulfillment providers, instant payment transactions, or online pricing and ordering.
I define “fintech” as any technology or combination of technologies that allow a financial services firm to innovate with new business models. And or product offerings. Many think about fintech in a consumer context. But computer technology has been integral to the delivery of most financial services for businesses and consumers for more than 50 years. What’s different about fintech today is the tech is now much less about automating existing processes, and much more about making entirely new financial services available to more people through new combinations of existing technologies.
Fintech Helps Retail, Manufacturing and Businesses in Need of Growth
Small Business Trends: Let’s hear more examples of business fintech.
Jim Shehigian: If you run a small retail business, new payment technologies like Apple Pay, Stripe, or Square, mean you don’t need to buy expensive point of sale hardware. You can often save on merchant account fees. And you have automated bookkeeping that reduces the need for accounting staff or services.
If you run a small or medium sized manufacturing firm, fintech applications can provide online treasury management and transaction services that only large firms with mainframe computers and money-center banking relationships could access a decade or two ago.
If your small business needs financing or growth capital, the business model that Rocket Mortgage used to disrupt and improve the consumer mortgage process is now being applied to business financing.
In Fintech, More Doesn’t Always Mean Better
Small Business Trends: While evaluating fintech, what should small businesses keep in mind?
Jim Shehigian: Business should start their search for fintech partners by first setting clear goals for how they want to transform their business. Then find the fintech applications which will make that transformation happen efficiently. For example, identifying the friction points in your sales cycle that cause delays in your receiving payments, and then selecting the payment processing application that addresses those specific friction points, is a better approach than just selecting the most visually-impressive or feature-laden payment app.
Speaking of “feature-laden”, more is often not better. The fintech apps that often have the most positive impact on a business are those that are simple and intuitive to use. Fintech should reduce, not increase, the number of steps your customers or employees must take for any transaction with your business.
Also, look for applications with a specific user base in your industry. You want to use fintech applications that have the terminology, transaction options and counter-party connections that are standard in your market.
Most Small Businesses Have or Will Experience Gaps in Funding
Small Business Trends: Would you remind our readers about how P2Binvestor is different? If for some reason a small business prefers a bank, what should they know about your company?
Jim Shehigian: P2Binvestor is a fintech company. And our unique technology platform allows us combine the power of crowdfunding with highly-efficient asset-backed loan servicing. The result is a line-of-credit for good and growing businesses that can scale from $500,000 up to $10 million as the client’s business grows. P2Bi bridges the gap in growth capital between a company’s initial seed capitalization and more expensive equity, or bank financing which is often not available to companies less than three years old and profitable. In seven years since P2Bi was founded, we have now provided over $1 billion in credit to these companies.
Fintech Firms Keep Growing
We continue to grow rapidly. And have expanded our footprint with a bank partnership program that gives banks a way to develop a commercial lending relationship with good businesses long before they would otherwise qualify for bank financing. This partnership has worked great for both the businesses we finance and the banks we partner with. Because sometimes small businesses slightly miss the mark for bank financing. But could be qualified based on joint credit policy criteria. These businesses are extended an asset-backed line of credit. With capital provided by the bank in a senior secured position. And the P2Bi marketplace in the second position. We’re continuing to grow our network of bank partners for this first-of-its-kind program. And so far, P2Bi has partnered with Amalgamated Bank, New Resource Bank, and Pacific Mercantile Bank.
Image: Depositphotos.com, P2Binvestor
I think that Fintech is all about being lean. The easier it is to use, the better.