Categories: B2B Payments

Crowdfunding, Deferred Loan Payments Jumpstart SMB Relief

Each week, PYMNTS will round up some of the latest initiatives from governments, banks and FinTechs around the world to lend support for small businesses struggling as a result of the coronavirus.

With U.S. lawmakers reaching an agreement on an unprecedented $2 trillion stimulus package, many small- to medium-sized businesses (SMBs) are headed for a bit of relief amid ongoing economic pressures.

As more government entities introduce measures to aid SMBs, banks and FinTechs have launched their own programs this week to accelerate access to much-needed capital for their SMB customers. Below is a roundup of some of the most recently announced measures.

Fed Calls On Small Banks

The U.S. Federal Reserve this week called on small banks around the U.S. to help bailing out their SMB customers, with some regional financial institutions (FIs) already taking action. One is OceansFirst, based in New Jersey, which has reportedly confirmed discussions with the Fed to provide a 90-day relief package for business loan and mortgage holders.

Another is ANB Bank with assets across Colorado, Wyoming and Kansas City, which has reportedly instructed employees to issue loan deferrals for commercial properties, with reports noting more relief is likely to come as the Fed seeks to buy an array of debt products to assist SMBs.

In Massachusetts, community FI Eastern Bank announced a $10 million commitment aimed at facilitating aid to SMBs as well as consumers and nonprofits affected by the coronavirus. The Eastern Bank Charitable Foundation will donate $3 million to local nonprofits focusing on coronavirus relief, with the remaining going to the bank’s own consumer and SMB customers via its Consumer Impact Loan Fund and Small Business Impact Loan Fund.

Challenger bank NorthOne revealed its own SMB coronavirus support initiative, announcing that it will waive all account fees for SMBs most affected.

Pennsylvania Offers State-Level Support

As more state-level governments introduce their own stimulus measures, Pennsylvania has announced a $60 million no-interest loan program to support its SMBs, Lancaster Online reports said. The financing will come in the form of up to $100,000 for SMBs with 100 or fewer full-time employees, with borrowers able to defer payments for up to one year.

U.S. FinTechs Encourage SMB Crowdfunding

Several FinTechs in the U.S. have launched new crowdfunding programs to support SMBs’ need for capital.

One of them is Fundopolis, which revealed a new initiative to ease barriers to SMB crowdfunding by halving fees charged on capital raises. SMBs will be charged no upfront fees, see a 50 percent reduction in escrow setup fees that can be paid at the close of a crowdfunding campaign, and will have the option to establish a debt offering.

Crowdfunding platform Wefunder announced its own effort to support SMBs this week, launching the Coronavirus Crisis Loan program to offer SMB loans of up to $1 million with payments deferred until 2021.

GoFundMe is also collaborating with Intuit QuickBooks and Yelp to accelerate capital raises for affected SMBs, while GoFundMe has also announced the Small Business Relief Fund as an additional measure to extend capital to SMBs.

Europe Clears U.K. SMB Support

The European Commission has approved of two U.K. state aid initiatives designed to support SMBs, reports in The European Sting said this week. One of those schemes aims to cover 80 percent of SMB loan facilities, while the other plans to funnel grants for coronavirus-impacted SMBs. The schemes will run through Sept. 30, with the possibility of an extension, reports said.

U.K. B2B FinTechs Band Together

A task force of U.K.-based B2B FinTechs has formed in an effort to develop a unified platform through which banks, alternative lenders and private investors can deploy funding for SMBs. Online lending platform Trade Ledger, credit underwriting firm Wiserfunding, trade credit insurance company Nimbla and client onboarding technology company NorthRow are collaborating on the solution, Finextra reported, to accelerate the flow of financing for U.K. SMBs in supplement to separate measures, like the British Business Bank Coronavirus Business Interruption lending Scheme.

Separately, alternative lending company Linked Finance debuted a new SMB loan product, the Deferred Start Loan, which offers a 15-month repayment plan with no requirement for SMBs to make any payments during the first three months.

India FIs Launch Emergency SMB Credit Lines

In India, state-run lenders are following the State Bank of India’s lead in launching emergency lines of credit for micro business and SMBs in the country. Bank of India, Union Bank of India, Indian Bank and Uco Bank have all announced their own measures following consultation with the ministry of finance, with reports in the Economic Times of India noting that additional measures from more banks are likely to follow.

Kuwait FIs Defer SMB Loans

In Kuwait, the coronavirus has prompted banks across the country to defer loan payments for SMBs as well as consumers for six months, according to Salaam Gateway reports. The Kuwait Banking Association has announced banks are also canceling interests and fees associated with loans.

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LATEST PYMNTS REPORT: MARCH 2020 B2B API TRACKER

B2B APIs aren’t just for large enterprises anymore — middle-market firms and SMBs now realize their potential for enabling low-cost access to real-time payments and account data. But those capabilities are only the tip of the API iceberg, says HSBC global head of liquidity and cash management Diane Reyes. In this month’s B2B API Tracker, Reyes explains how the next wave of banking APIs could fight payments fraud and proactively alert middle-market treasurers to investment opportunities.

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