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

Financing customers is an old tradition in the business world, especially within large companies like Apple and Amazon. However, when small and medium sized businesses (SMBs) begin to do it, it is like a new dawn breaking the horizon.

The Tarci research team recently discovered that over 6,000 SMBs offer financing to customers every year, establishing potential partners, customers, and revenue streams. In fact, SMBs that offer financing options are able to increase their sales by an average of 20%.

Surprising Reason Behind SMB Financing
By offering financing to their customers, SMBs can help their customers afford their products or services, but also boost their own bottom line in the process through a variety of avenues.

  • Competition and Pandemic:

Since the pandemic, there has been a significant increase in small businesses. US Census Bureau data reveals an average of 4.4 million new businesses are created annually. As competition intensifies, SMBs are providing financing as a strategy to stand out.

  • Financing Technology:

New platforms and tools have emerged to help SMBs offer financing, manage payment plans, and track customer payments. From PayPal Credit and Square Installments to QuickBooks and Xero, SMBs are able to provide financing and payment plans along with invoicing and payment tracking.

  • Changing Customer Behavior:

Consumers today are interested in affordable and flexible payment options when making purchases. The establishment of SMB financing allows businesses to meet this demand by creating accessible and attainable products and services.

How to Embrace SMB Financing Trend for Growth

  • Conduct Market Research

Begin with conducting market research to identify the SMBs in your target market that offer financing to customers to understand the landscape and identify potential customers and competitors.

  • Develop a Financing Strategy

Differentiate yourself from competitors by developing diverse financing opportunities for your SMB customers who are looking for flexible payment options.

  • Forge Partnerships/Collaborate

By creating potential partnerships with SMBs that offer financing to customers you can offer more comprehensive solutions and increase sales for both parties.

  • Leverage Technology

Utilize the evolving technology available that make it easier for SMBs to offer financing, manage payment plans, and track customer payments. These tools and platforms can help streamline your financing potential and increase customer satisfaction.

  • Educate Customers

Educate your new and existing SMB customers on the growing financing trends to guide customers in making informed decisions and ultimately increase the establishment of successful financial partnerships.

The rise of SMB financing is a phenomenon that cannot be ignored.
Embark on this growth to help grow your business and reach a wider range of customers.

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