B2B BNPL: Small business financing done differently

The boundaries between consumer and business innovation are becoming increasingly blurred as tech companies take successful B2C products and remodel them as attractive B2B propositions.

Buy-now-pay-later is a good example of this trend. Its growth in the retail space – combined with a barrage of economic pressures pinning down SMEs – has prepared the ground for similar products to take root in the business world.

To help innovators better understand the opportunities that the B2B buy-now-pay-later concept offers, Marqeta has produced B2B BNPL: Small business financing done differently.

A compact and digestible ebook, it’s filled with authoritative insights and guidance informed by research among hundreds of European SMEs and conversations with innovators already delivering in the B2B lending space.

Read the ebook here.

What small businesses need from finance innovators today

The global pandemic, conflict in Ukraine and the protracted economic squeeze have changed the business landscape, creating significant challenges for many small company owners.

Yet despite this tough environment, there are some exciting positives. Technology is enabling hard-pressed SMES to automate time-consuming business admin processes. It’s also opening up new channels of funding and opportunities to engage customers digitally.

In addition, Marqeta’s conversations with SMEs and solopreneurs revealed that businesses are able to push through macroeconomic headwinds if they can meet four key priorities, specifically: access to funding; money management; scaling; and maintaining a competitive advantage.

However, our survey also suggests that businesses find this easier when they are supported.

For instance, half of the firms surveyed told us that they had between £10,000 and £75,000 owed by customers each month. Outstanding balances like this undoubtedly hit cash and liquidity, making the money management priority much more of a challenge.

The significance of the late payments problem becomes more obvious when you consider the findings of other studies, which show that many SMEs lack an awareness of all available funding options and don’t find traditional loan applications easy.

To our mind, this demonstrates that there’s a market opportunity for innovative finance products – products designed to empower SMEs to meet their four priorities.

How a modern approach to lending can meet SME financing needs

Having established a clear business case for building and launching SME buy-now-pay-later products, innovators will need to consider their approach to designing a proposition roadmap. B2B BNPL: Small business financing done differently helps get the ball rolling here with a set of tips for aspiring modern lenders:

Firstly, it’s important to ‘retain a beginner’s mindset’, as this will help keep you humble, curious and open to new ideas.

Secondly, startups should ‘harness technology appropriately’. There’s no need to reinvent the wheel; use existing tried and tested open API and Open Banking interfaces – while remembering to stay human and social.

Thirdly, be prepared to ‘disrupt your business and thinking’. Your target customers don’t exist to borrow money – focus on serving their needs and delivering a clear benefit to their business.

Fourthly, finance should be embedded. This way, you’ll match the experience consumers now enjoy with B2C buy-now-pay-later, recreating its appeal for a professional audience.

And finally, make sure you partner with members of the payments ecosystem who ensure you have control over your tech stack.

Essential reading for B2B BNPL innovators

With its original research, invaluable insights and useful advice, B2B BNPL: Small business financing done differently is a valuable guide for fintech innovators looking to launch a new product or evolve existing products.

And as buy-now-pay-later propositions evolve at a rapid pace, we’ll be sure to update the ebook with new insights and learnings.

On that point, if you offer, or are thinking of offering, buy-now-pay-later products and would like to exchange ideas with one of Marqeta’s embedded finance experts or collaborate on lending thought leadership initiatives, please get in touch by emailing: europe@marqeta.com

Download the ebook here.

* In our next blog we explore the research findings in B2B BNPL: Small business financing done differently.