Changing the SMB Cash Flow Dynamic

23 million small businesses in America drive the U.S. economy by accounting for 54% of all U.S. sales. While small businesses employ half of the private sector payroll and produce half of the private GDP, they often find it difficult to stay afloat due to the challenges of financing the business and securing credit. It is no surprise that only about half of all new small businesses survive five years or more and about two-third fail before completing 10 years.

The current lending climate for SMB’s often means a significant amount of a company’s revenue goes toward repaying debt and debt-related charges, leaving very little for investment in operations. The long delays in receiving funds from their customers further increases the burden of interest charges for small businesses. In the face of these challenges, the majority of SMB’s struggle to access affordable working capital.

In the past few years, securing credit has only become tougher with regulators forcing banks to maintain higher collateral requirements and personal credit thresholds, along with a growing disinclination to fund against illiquid collateral. Small business loans in absolute amount are down by about 18% since 2008 and the portion of small business loans as a share of total loans has also been steadily on the decline since the 2000s. Even though in the past few years the Small Business Administration established by the Congress has led major efforts to support small businesses by providing record lending and passing major bills, a wide gap still exists between the needs of the small businesses and the SBA’s market reach.

C2FO’s online working capital marketplace has been rapidly filling this gap through a platform that allows businesses of all sizes to collaborate with their customers for securing early payments. C2FO provides working capital funding by enabling businesses to select a discount rate that works best for them in order to accelerate payments. With an overall supplier recommendation rate of 91% and Net Promoter Score of 61 (an NPS of more than 50 is considered world-class), C2FO not only provides businesses easy access to funds but also helps in reducing their DSO so that they can generate timely cash for their operations. With C2FO, businesses gain access to affordable working capital, allowing them to strengthen their overall financial health.