#smallbusinessweek Funding for SMBs

By Christopher Johnson

America’s 30 million small businesses and 200,000 middle market firms are the heartbeat of the U.S. economy. Together they generate 75% of new jobs and 50% of the nation’s revenue. Optimism is high among these businesses: 83% of SMBs are expecting increased revenues and 72% are expanding their workforce. Plus, 65% of businesses surveyed for the most recent National Center for Middle Market Indicator are planning to increase investment this year.

But there’s a stumbling block. SMBs are finding it increasingly difficult to secure funding for critical assets. This funding is necessary for them to take their next steps in progressing toward sustainable growth. They need capital for equipment, inventory and technology. They need access to funds to offer world-class products and services, better customer experiences, enhance their digital platforms and gain a competitive edge.

Applying for loans can be labor intensive and complex: The average small business owner needs to approach multiple banks and spend nearly three to four days filling out applications and gathering documentation before they can find a bank willing to lend to them. They also face the challenge that, while more SMBs seek financing to grow their businesses, the number of banks willing to lend to them is in decline. Banks in the U.S. are closing branches at record levels—a result of consolidation, the shift to digital, rising overhead costs and the drive to improve margins. In fact, the number of community banks has declined by more than 11,000 over the past 30 years.

These trends are compounded by the reluctance of financial institutions to lend capital to smaller organizations. Small business loans now represent less than 30% of total bank loans. The FDIC reports 10 consecutive quarters of decline in small business lending. This makes it harder for SMBs to get access to competitive funding.

As a result of this challenging lending environment, small businesses often turn to high interest credit cards, personal savings and crowdfunding for financing. Fortunately, there are other solutions.

SMBs struggling to get consistent financing sources must look beyond traditional routes to obtain capital. For example, new alternative lenders that are more suited for the SMB segment are coming into the market. One such company is from global ecommerce company Pitney Bowes. Pitney Bowes recently launched Wheeler Financial, a new subsidiary of its Pitney Bowes Bank, Inc. dedicated to helping small and middle market clients acquire the critical assets they need to grow and expand their businesses. Wheeler Financial will help clients purchase new equipment and services critical to the industries in which they operate with loans, leases, and other financial structures. For 30 years Pitney Bowes has been focused on small business lending and is strategically expanding its operations in this vastly underserved market.

For SMBs, there are a number of new alternative financiers that are exploring and launching new financing solutions to reach and support SMB and entrepreneurial growth. Fast-growing independent financial companies are emerging on the side of SMBs. There are options out there—it is a matter of knowing where to look to find the right solution that fits your needs.

Christopher Johnson is the President of Pitney Bowes Financial Services.

Funding stock photo by EtiAmmos/Shutterstock