Novo is conducting a pilot of a working capital program designed for small business owners.
Over the last six months, the pilot program by the financial platform for small businesses has originated more than $20 million in merchant cash advances, worked with 3,000 customers and provided each with access to as much as $50,000 in flexible working capital, Novo said in a Wednesday (March 29) press release.
“At Novo, we’re building a working capital product that truly serves the needs of small business owners — one that can quickly analyze their revenue streams, and offer them the capital they need and at a rate that is fair,” Novo CEO and Co-founder Michael Rangel said in the release.
The company expects to launch the working capital program to its customers in the coming months, after completing and analyzing the pilot, according to the press release.
Businesses with annual revenues of less than $500,000 have had access to only “extremely limited” options for borrowing money, Rangel said in Novo’s press release.
“Small business owners can find themselves either taking on extremely high interest credit card payments when they need to borrow a few thousand dollars, or going through a drawn-out approval process with their bank only to find out that they do not meet the bank’s revenue requirements for a loan,” Rangel said in the release.
Small and medium-sized businesses (SMBs) are an afterthought for the marquee names in banking, so banks offer a patchwork of cobbled-together apps and products for these clients, Rangel told PYMNTS’ Karen Webster in an interview posted in January 2022.
“There’s really not much banking functionality being offered to what is effectively the economic engine behind this country,” Rangel said at the time.
Seeing that void in offerings from banks, Novo has focused on solutions for firms with $25,000 to $500,000 in annualized top lines and as many as 10 employees, Rangel said.
Along with the working capital program now being piloted, other recent introductions from the company include Novo Invoices, which helps SMBs receive payments faster; Novo Boost, which gives them same-day access to payments received through Stripe; and Express ACH, which processes same-day ACH payments, according to the press release.