The Rise of SMB Financing: Key Insights and Trends You Need to Know

The rise of SMB financing, the reasons behind it and how you can leverage it to better serve this market.

Financing customers is an old tradition in the business world. But when small businesses begin to do it, it is like a new dawn breaking over the horizon.

The Tarci research team recently discovered a new insight. Over 6,000 small and medium-sized businesses (SMBs) offer financing to customers every year.

Think about that for a moment. 6,000 businesses. That’s a lot of potential partners, customers, and revenue streams.

The rise of SMB financing is a phenomenon that cannot be ignored by entrepreneurs and this article will help you understand the key insights and trends in this area.

So grab a drink, settle in, and let’s delve into this exciting topic together.

Surprising Reasons Behind SMB Financing

We know why companies like Apple and Amazon offer financing options to their customers, but why are small and medium-sized businesses getting in on the game? The answer might surprise you.

SMBs offering financing options to their customers are actually able to increase their sales by an average of 20%. This means that not only are they helping their customers afford their products or services, but they are also boosting their own bottom line in the process. But how exactly are they doing it? Let’s take a closer look at the surprising reasons behind SMB financing.

Competition and Pandemic

The pandemic has spurred a rise in small businesses, causing the number of new businesses to increase. US Census Bureau data reveals an average of 4.4 million new businesses are created annually.

As competition intensifies in many sectors, SMBs seek ways to stand out and draw in customers. Providing financing is one strategy, as it gives customers more payment options and flexibility.

Financing technology

New platforms and tools have emerged to help SMBs offer financing, manage payment plans, and track customer payments.

For instance, PayPal Credit and Square Instalments are two examples of platforms that enable businesses to offer financing and payment plans respectively. QuickBooks and Xero provide invoicing and payment tracking capabilities.

Changing consumer behavior

Many consumers today are looking for more affordable and flexible payment options when making purchases. By offering financing, SMBs can meet this demand and make their products or services more accessible to a wider range of customers.

How to Embrace SMB Financing Trend for Growth

Now that you have a better understanding of the rise of SMB financing and its implications for businesses that sell products or offer services to SMBs, it’s time to take action. Here are some steps you can take to turn these insights into tangible results for your business:

  • Conduct Market Research: Start by conducting market research to identify SMBs in your target market that offer financing to customers. This will help you understand the landscape and identify potential partners or competitors.
  • Develop a Financing Strategy: Consider developing a financing strategy that incorporates financing options for your SMB customers. This can help you differentiate yourself from competitors and attract more customers who are looking for flexible payment options.
  • Forge Partnerships: Look for potential partnerships with SMBs that offer financing to customers. By working together, you can offer more comprehensive solutions to customers and increase sales for both parties.
  • Leverage Technology: Explore the new platforms and tools available that make it easier for SMBs to offer financing, manage payment plans, and track customer payments. By leveraging these technologies, you can streamline your financing processes and provide a better customer experience.
  • Educate Customers: Consider investing in educating both your new and existing SMB customers about financing. By offering resources and guidance on financing, you can help them make informed decisions and increase the likelihood of successful financing partnerships
  • Collaborate: Look for potential partnerships with SMBs that offer financing to customers. By working together, offer more comprehensive solutions to customers and increase sales for both parties.

Moving Forward: Turning Insights into Action

Adjusting to a new trend can be daunting, but fear not. Let us help you take the first step by using our data to identify the SMBs to target with your strategy.

At Tarci, we have been closely monitoring many SMBs and have the insights you need to create offerings that will satisfy their evolving needs.

By collaborating with us, you can turn these insights into tangible results that will help you grow your business and reach a wider audience of SMB customers. 

Don’t let this opportunity slip away – take action today.

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