The world we live in getting more complex, especially in the realm of data and business. As technological change continues to offer new, more efficient solutions to big business problems, the demand for cutting-edge tech is achieving astronomical heights. For the largest financial institutions in the world, revamping and modernizing data platforms and software is not as easy as writing a check and flipping a switch. Although change is coming, the financial behemoths are slow to move and act, allowing small business entrepreneurs the chance to swoop in and offer quick solutions to those in the market.
Having painted this basic picture of a truly multifaceted state of affairs, the point is to highlight the opportunity and consequent optimism for those small businesses and entrepreneurs who are investing in cutting edge tech. In fact, the small-business optimism index by the National Federation of Independent Business grew to a four-month high in April, rising 1.7 points to 103.5. According to the NFIB, earning trends had the largest increase of all ten components. Basically, small businesses are making money. But in this world, you need money to make money, so how are small businesses acquiring the funds to invest in industry-leading tech? Well, small business loans are experiencing record approval rates.
Basic economics tells us that investment in capital is one of the only ways to grow an economy, and with large and small banks alike lending to small businesses in record fashion, the result is a surge of success for small businesses getting their feet wet in the tech/software world. Specifically, FinTech (Financial Technology) entrepreneurs and small businesses are finding greater success. As illustrated previously, larger institutions are a bit more constricted when it comes to change, and in the realm of finance, time is money!
Small bank approvals of business loans increased from 49.4% in March to 49.8% in April, and that’s not all small banks are approving of when it comes to small businesses. In an interview with American Banker, former SBA Administrator Karen Mills said that the next wave of the evolution of banking will be partnerships between FinTech entrepreneurs and banks, mainly small banks. Mills, who had just written a new been entitled Fintech, Small Business and the American Dream, had this to say about the optimistic future relationship between banks and small businesses, stating, “We have come to a moment where banks want to partner with FinTechs for technology and for platforms without developing it themselves. They can access bank accounts, Amazon purchases, and eBay activity to determine if a small business is creditworthy.” The possibilities are endless!
There was a time when the thought of small business brought tears to the eyes of those who thought they were witnessing the extinction of the American Dream through the diminishing prevalence of the small business sector. Luckily, technological change has been known to shake things up in the economy, and in this respect, it certainly has. The American dream is alive and well, and opportunity and optimism are growing for tech savvy small business owners and entrepreneurs.