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Who’s Helping SMEs — And Who’s Snubbing Them?

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No small business is an island. SME owners need help to be successful, and that aid can come from nearly anywhere — from close friends and family members, to financial institutions, to government agencies. And we’re not just talking about financing. The latest research finds SMEs need support in cybersecurity, employee management and technology. PYMNTS examines where SMEs across the world are actually receiving this support and where entrepreneurs feel they’ve been ignored — and by whom.

 

1.6 million U.K. citizens have lent money to a small business owner, often because those SME owners are family or friends of the lender. In total, researchers at alternative lender ThinCats found, more than $9 billion has exchanged hands within social networks to help a small business, with evidence suggesting that, often, it’s a loan given from a parent to their child. But the emergence of alternative lending platforms, the company noted, has also supported individuals’ participation in the SME finance space. “The good news,” said ThinCats Founder and Chairman Kevin Caley in a statement, “is this tightening of lending from banks has encouraged us to become a nation of peer-to-peer lenders, giving everyday investors the opportunities to make healthy returns through the emergent alternative finance sector.”

63% of SMEs surveyed by Sage say they feel ignored by policymakers, according to a report published last week. That figure represents the portion of small business owners that are either unaware of government efforts to support their operations or those that feel underrepresented by politicians in their home countries. In the U.S., the top political issues concerning SMEs are the high costs of living and economic stability, though Sage found that most entrepreneurs feel more confidence about the economy than they did six months ago. Sage CEO Stephen Kelly said in a statement that these concerns highlight the need for policymakers to include small business owners in on their decisions. “So often, when the world’s policymakers discuss the economic picture, these entrepreneurs are excluded from the discussion,” he said.

A 61% decrease in the number of U.S. banks in the last three decades is leaving new opportunities for venture capitalists to fill in the financing gap for startups, according to new research. Analysis from Florida Atlantic University, York University and the University of Hong Kong found increasing levels of venture capital investment and its direct link to growth rates of small businesses. Payroll, employment and the number of firms increase along with a rise in VC funding, researchers found. While the results are promising, researchers highlighted the fact that the trend has emerged as traditional financing options from banks have dwindled for small businesses since 1995.

25% of companies are able to detect a data breach, a number troublingly low, said Tripwire. The company published new analysis on how enterprises can detect and respond to a cyberattack and found that, while cybersecurity budgets have increased, companies are still struggling to gain adequate resources to deal with these issues. Just 3 percent of businesses surveyed said they outsource the job of responding to a security issue to third-party experts.

One-quarter of small business owners fear disloyal employees, according to the latest research from U.K.-based AXA PPP health insurance. The report aimed to explore SME owners’ top worries and concluded that many of them aren’t based on financial challenges. More than a quarter (26 percent) said managing their social life was the biggest concern, while 29 percent said losing key staff was their top worry. Managing finances when it comes to wages of their staff was also a leading cause for sleepless nights, as was difficulty accessing finance. Based on anecdotal evidence, AXA PPP health insurance found that the sheer array and multitude of worries that a small business owner needs to keep in mind cause them to lose sleep.

12% of U.K. SMEs have either failed or faced insolvency because of cash flow problems, found the latest report from Amicus Commercial Finance. More than a third of the companies surveyed said they have struggled with cash flow issues over the past two years. Paying suppliers, the survey revealed, comes out as the biggest challenge stemming from these cash flow problems. Amicus Commercial Finance concluded that education about the importance of cash flow management isn’t enough — SMEs need technology that can keep up with the dynamic nature of cash flow and working capital.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

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