Originally appeared in The Financial Revolutionist

Despite recent economic indicators showing small business conditions are improving, recent research shows that many small business owners are still feeling the pinch of economic pressures. A recent survey suggests 45% are taking steps to cut nonessential spending, and 34% have accepted lower profitability. 

Can fintech firms help ease this burden for small business owners? We feel that there is a rich opportunity for fintechs to step in and develop convenient and cost-effective tools designed to support business processes and other challenges.

From improving cash flow management to accessing alternative credit sources, fintechs have a broad toolset to help small businesses overcome financial obstacles. Word seems to be getting around, with more than 65% of small businesses saying they partner with fintechs outside their primary financial institution to meet at least one financial need. 

So how exactly can fintechs meet small business needs, a sector often overlooked by the financial services sector? Here are three ways fintechs can make a lasting impact.

1. Access to financing

With limited credit histories, the absence of established business bank accounts, and a higher perceived risk, small businesses often face an uphill battle when securing credit. Currently, only 31%  of small businesses report receiving the full amount of financing when pursuing a loan, and 75% state they are increasingly concerned about  access to credit.

More than ever, small businesses need alternative lending options that allow them to access cash flow and capital. For fintechs, the best way to accomplish this is to create credit assessment strategies that aggregate data from many sources. While many traditional banks rely on outdated models that don’t consider small businesses’ full financial picture, emerging technology is allowing fintechs to assess creditworthiness based on real-time data and non-traditional data sets.

Take fraud as an example. While this metric has traditionally not been factored into a credit score, new digital tools are allowing banks and third parties to assess the level of credit card fraud a small business might encounter and how fraud impacts them. This gives creditors greater confidence and flexibility to offer loans to stable small businesses.

2. Account aggregation for a holistic financial picture

Recent data suggests as many as 37 % are unable to fill current job openings, highlighting the difficulty for owners in recruiting and finding talent. Given that small businesses can be thin on the ground and lack resources, fintech providers have an opportunity to move beyond payments and provide customers with experiences that bring together multiple aspects of the financial journey. For example, small business owners could have access to real-time data from separate accounts in a single application or cloud-based solution. This gives them the flexibility to easily track payments and invoices with minimal friction.

3. A platform approach: growing with your clients

Given the limited resources available to many small businesses, fintechs should not only seek to offer solutions that reduce time, effort and costs, but also provide a platform that evolves with their customers over time. While a small business might initially come to fintechs for one solution, they will likely seek additional services as their needs evolve.

With small business owners increasingly relying on digital tools to meet their financial needs, fintechs have a valuable opportunity to solve pain points, improve efficiencies and help this important economic engine grow. By using innovative technology that offers customers  improved access to credit, a comprehensive financial picture and enhanced financial oversight, fintechs can help small business clients navigate difficult operating environments and weather many common challenges faced by small businesses today.