Resources | ESG and Diversity | September 27, 2023

To Boost Sustainability in Small Business, Increase Their Access to Working Capital

Alex Donnelly, C2FO’s COO for the Americas, told a UN audience how C2FO’s approach could benefit sustainability efforts.

Alex Donnelly, C2FO’s COO for the Americas, told a UN audience how C2FO’s approach could benefit sustainability efforts.

Small and medium-sized businesses have an important role to play in global sustainability efforts, but many of them simply can’t afford to invest in clean energy and other upgrades. 

That’s why the United Nations convened a panel on Sept. 16 at its New York headquarters, where experts from small businesses, regulatory agencies, financiers and other stakeholders discussed potential strategies for improving smaller businesses’ access to capital.

Alex Donnelly, C2FO’s COO for the Americas, shared her expertise as a panelist during “Bridging the Financing Gap: Unleashing the Potential of Small and Medium-Sized Enterprises (SMEs).” The panel was part of the UN’s larger Sustainable Development Goals (SDG) Action Weekend. 

By one estimate, SMEs make up roughly 90% of the world’s businesses. If they implemented environmentally friendly practices, it could mean significant progress toward sustainable development goals. 

Unfortunately, these smaller businesses often can’t access affordable, convenient financing and struggle to participate in value chains, either at the local or global level. As a result, many SMEs don’t have the resources necessary for clean energy projects or other upgrades. 

“I think most people understand that small businesses pay higher rates for lending than their larger peers,” Donnelly said. “But what they may not understand is that they don’t have access to the same level of capital as their larger peers.

“And this is a self-perpetuating problem. There is a vast chasm that exists between small and medium-sized businesses in terms of funding. If a business does not have capital, it cannot grow, and it cannot cross that chasm to becoming a medium-size business that has the creditworthiness and access to traditional lending.” 

Donnelly mentioned C2FO’s on-demand working capital platform as a potential model for changing this dynamic. 

Its marketplace incentivizes large enterprise buyers to pay their suppliers — many of which happen to be smaller businesses — very quickly, in exchange for a customized discount. SMEs experience a boost in working capital without having to take on more debt.

“There is no paperwork, and it’s very seamless – two clicks,” Donnelly said. 

C2FO’s approach also benefits women- and minority-owned businesses, which use the solution roughly twice as often as their peers do. 

While there are many government-sponsored programs designed to help those companies, they usually require official certification as a Women Business Enterprise or a Minority Business Enterprise — a process that demands time and effort. 

C2FO has created special marketplaces where those companies can receive preferred terms without official certification because the companies’ enterprise buyers verify their status. 

One potential opportunity, Donnelly said, is for governments to sponsor working capital programs like C2FO’s. 

“Now imagine for a moment if the governments of the world were to create national platforms for working capital,” Donnelly said. “In this case, what they could do is spur this type of action from the private sector and these large enterprises to ensure they’re paying these companies in a timely manner.” 

For up-and-coming countries, Donnelly said, that could have a noticeable effect on GDP: “That is a key way that we can improve unemployment and grow GDP in these economies.” 

Explore how C2FO’s solutions can create positive outcomes for both suppliers and buyers

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