As small businesses across the U.S. experience mixed feelings of both optimism and concern in a challenging economy, there’s one thing the majority can agree on: accessing capital is difficult. According to a recent survey from Goldman Sachs, 77% of small businesses worry about their ability to obtain capital.

Cash flow difficulties are common among small business owners. Growth aspirations aside, many are operating without a sufficient financial reserve to just keep the lights on, should they face unexpected hardships. In fact, roughly half hold onto only enough cash to float them for one month’s duration.

Adding to the strain are the limitations of traditional financing methods. Lengthy application processes, predatory interest rates, and loan refusals tied to personal credit scores are all common barriers that have confronted the 76% of small business owners who say the difficulty of accessing affordable capital has negatively impacted their business.

This growing need for alternative financing options and greater accessibility to capital has motivated one particular group to answer the call: vertical software providers. Inextricably linked to the health and growth potential of their users, software companies are in a unique position to address the capital availability challenges of SMBs.

Merchants already rely heavily on their vertical software to address a wide range of operational needs. And now, there’s reason to turn to them for their funding needs, too. With the rise of embedded finance solutions, like Worldpay Capital, an embedded lending offering, software companies are carving out a share of the lending market, providing more accessible options for their users, and as a result, reinforcing the importance of their role as a complete operating system.

“In this economic landscape, there’s never been a more opportune moment for software companies to provide their merchants with capital that can take those businesses to the next level,” said Ian Hillis, SVP of Growth at Payrix and Worldpay for Platforms. “By addressing financing needs within the convenient, trusted, and familiar workflows of the platform, vertical software companies will further establish themselves as the single most valuable partner in the eyes of the business.”

As it turns out, small businesses are ready for new financing options from their vertical software providers. According to a survey from Unit, 84% of businesses said they would be willing to explore financial products from their business software tool, if they were offered. That includes payment acceptance, too. Focused on finding something simple to manage, yet robust in capabilities, one in five businesses is extremely likely to switch management software providers to be able to accept all the types of payments they want and need.

Embedded finance products like Embedded Payments, are already key value and growth drivers for software companies. For those engaged with an existing embedded finance partner, integrating into an embedded lending program can be a seamless transaction. Since they’re connected to a payments ecosystem in which the financing infrastructure is already in place, it only becomes a matter of merchant adoption and activation.

“Vertical software companies already drive so much growth for small businesses,” said Hillis. “Closing the financing gap with embedding lending is a low-lift, high-reward strategy that can make a software company even more indispensable to its users.”


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