Small-business owners are increasingly relying on digital financial tools to help them manage spend, process payments, track payroll expenses, and handle other administrative tasks, according to the Financial Technology Association.

That’s why the trade group, which represents 26 fintechs, says it is backing the Small Business Technological Advancement Act, a bipartisan bill that would clarify that loans made under the Small Business Administration’s 7(a) program can be used to help cover the fees associated with fintech services. 

“The SBA lending program is known primarily as a way to access capital,” said Miranda Margowsky, the FTA’s head of communications. “But this bill really recognizes and calls on the SBA to clarify that there are a range of other digital financial tools that are important to small businesses.”

Small businesses that use a large number of digital tools are more likely to report recent revenue growth, according to a survey released by the Bipartisan Policy Center last year.

The report found that 84% of small businesses that use six or more technology platforms saw an increase in profits.

While fintechs can help small businesses scale and compete with larger firms, the fees associated with their services can be a hurdle for entrepreneurs, according to Sen. Todd Young, R-IN, who, along with Sens. Jacky Rosen, D-NV, Ted Budd, R-NC, and Jeanne Shaheen, D-NH, introduced the SBTAA in July.

“Technological advancements have created opportunities for small businesses to tap into the digital economy and expand their customer base. However, the high upfront and ongoing costs associated with these technologies can pose financial challenges,” Young said in a statement.

Margowsky called the SBTAA a “simple, common-sense fix” that represents a larger effort to modernize the way the SBA serves small businesses.

“It really acknowledges the digital reality and the needs that small businesses have today,” she said. “Basically, there’s nothing that calls out digital tools right now in the SBA 7(a) program. This really provides clarity that a small business owner that is applying for funds can use those to cover some of these tools that are really critical for the businesses of today.”

Kenzie Biggins, the CEO and founder of Greenville, South Carolina-based Worxbee, an executive assistant placement firm, said she would consider taking out an SBA loan if she knew the funds could be used to cover some of what her company spends on fintech tools. 

“Being able to use it to actually pay for the things that we use to operate our business will make it more effective for us,” said Biggins, who launched Worxbee in 2013. 

As a virtual business, Biggins said her use of tools like Bill.com and Quickbooks make up a significant portion of her company’s operating costs.

Biggins said she hopes the SBTAA would promote more understanding about the way some small businesses rely on fintechs to operate. 

“It’s about transparency and grace … allowing [small business owners] to spend money on what actually leads to their growth and what helps them manage their business instead of the traditional way it’s always been,” she said.

A large portion of the FTA members are fintechs that serve small-business owners, a segment of the market that has historically been underserved by traditional financial institutions, Margowsky said.

Stripe, Intuit and Bluevine are among the FTA’s members that offer services for the SMB market. 

“Digital tools are really critical for any small-business owner,” Margowsky said. “If you’re a team of three or five, you may not have the resources to hire a full time CFO. A lot of these tools make it possible for you to streamline the processes of doing your accounting or finances, allowing you to focus on your business, reaching customers and hiring new workers.”


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