When credit managers are extending lines of credit, the size
of their customers’ business is a factor to weigh in the decision-making
process. Just because a business is small doesn’t mean it will never get
credit, but both parties have to remain more alert. On Aug. 27, global fintech
company Tide explained how micro-SMBs (small- to medium-sized business), those
typically having less than 10 employees, exhibit a few specific risks in
connection to their size.
As small businesses are getting off the ground, Tide CEO
Oliver Prill told PYMNTS, there’s always a chance they won’t make it. There is
great probability that costs will run high in the business’ early stages,
leaving potential creditors uncertain about the investment. Although Tide is
not a direct lender, the company is a data provider that helps manage credit
risk for such businesses.
Unfortunately, Prill continued, smaller businesses are also
more susceptible to financial crimes, such as money laundering, which again
deters credit managers. According to an article by Influencive, micro-SMBs are
prime targets because “many startups lack the resources to recover once their
business operations have been interrupted and/or their brand’s reputation has
been compromised.”
“For this reason, it is of paramount importance for small
businesses to consult with cybersecurity experts and utilize IT services that
ensure the security of their networks,” Influencive states. “Also, by deploying
an IT infrastructure, small business [should] not only streamline their
business operations, but also become competent enough to fight off the
competition and survive hostile markets.”
—Andrew Michaels, editorial associate
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