Working capital is the lifeblood of merchants who do business online, serve consumers, and even buy goods and services from each other. Working capital provides the cash you need to purchase inventory, pay staff, and take advantage of growth opportunities.
Many e-commerce platforms are making the leap into providing capital to these businesses as a form of embedded finance, in some cases with virtual cards.
As I pointed out here last week, home depot That said it is Piloting trade credit optionsAnd the management team is HD Supply (Home Depot obtained (2020) already provides that functionality. Comments on the earnings call noted that the piloted options are part of “enhanced digital capabilities,” which are important for online/platform channels to reach these small businesses. We would like to argue that this confirms the fact that it is becoming a means.
In other places, In the latest 10-K filing In cooperation with the Securities and Exchange Commission, PayPal We detailed that we offer access to merchant finance products for small businesses, including PayPal business loans. The most recent receivables on the balance sheet were $1.2 billion.
Starting credit options
Shopify I said it last summer I launched Shopify Credit. An all-inclusive card for Shopify merchants that lets you earn cash back and issue cards to your company's staff members (along with spending limits).of Latest corporate filings Overall, Shopify's loans and merchant cash advances, on a net basis, increased from $580 million to $816 million at the end of 2023.
We will learn more about the status of merchant financing in the future. block We will report earnings tonight (February 22nd). As we pointed out, coverage Among the latest statistics: Block's financial results, the company noted in an investor document that Square Loans facilitated approximately 120,000 loans totaling $1.17 billion, an increase of 4% year over year. did.
The platform model offers a variety of built-in financing options for these small businesses, which have already established a digital presence in-store and online, and are looking to expand their reach.
And, as PYMNTS Intelligence data reveals, a significant portion of Main Street small businesses are moving online. at the end of last yearEven if you have a physical store.
Companies operating online are optimistic about their prospects. 57% of businesses that sell primarily online (and perhaps also on platforms) say their revenue will increase this year, and that total rises to 61% for e-commerce and brick-and-mortar stores. evenly divided. .
Elsewhere I just pointed out that: 47% of small businesses People with annual revenues of $10 million or less had access to business or personal financing. As a result, around half do not have access and 8% of small businesses can only access personal loans. Almost half of Main Street small businesses say they plan to increase their use of credit products in 2024, setting the stage for platforms to take some advantage of embedded financial businesses.
