In the past week, PayPal has announced the launch of a new lending service for small and medium-sized businesses in the UK. This initiative, scheduled to start rolling in August, follows a similar program begun and successfully run in North America last September. PayPal’s Working Capital will offer cash-advances for smaller companies who cannot as easily utilize bank loans and lending services.
This alternative financing option cuts through several hoops for which SMEs often don’t have the 
time or money by replacing credit checks with existing sales histories, requiring only one fixed fee, and allowing a flexible and easy repayment program. PayPal has shown great interest in small businesses in that past—they’ve launched several education campaigns to help SMEs grow online. According to the Managing Director of PayPal UK, Cameron McLean, programs like Working Capital are essential because “small businesses are the lifeblood of the British economy.”
The attitude that SMEs are important in every economy is one that PayStream Advisors’ research has recently seen resonate throughout global markets, industries, and governments. In the world-wide economic difficulties over the last several years, SMEs have arguably suffered the most of the business sphere. Now, corporate and government leaders around the globe are taking initiatives to restore the vitality of this essential part of the financial eco-system.
Much of the action to help SMEs has revolved around making the purchase-to-payment process easier and faster. In North America, President Obama’s recent SupplierPay initiative has created partnerships between the federal government and several larger corporations to promote expedited payments to their smaller vendors, allowing those small companies to free up more working capital to grow their business and hire more workers. The UK has also launched several initiatives to spur small business growth over the past two years, including revamped VAT tax returns and more releases of educational market material on small business financing, such as the newly published Euro Banking Association (EBA) guide to the European supply chain finance market.
In response to government steps taken towards a more balanced trade market, solution providers have also enhanced their offerings with SME’s in mind. To complement SupplierPay, Taulia Inc. launched the Early Payment Quick Start Initiative, a program that encourages and simplifies early payment financing. TradeShift has also taken a stand to help the small and big business connection, both 
literally with their expansive supplier onboarding techniques, and vocally. In a recent interview on the business news show, Lou Dobbs Tonight, Tradeshift CEO, Christian Lanng discussed the importance of eliminating frequent late payments between big buyers and little suppliers to help the supply-chain and the economy as a whole.
PayStream’s research has found this increased focus on supply-chain financing in several more software companies, and from several more important global voices. We believe this focus on supply-chain financing is not simply a trend, but one that will increase as the rest of the world realizes the importance of maintaining a healthy SME eco-system. For more insight into the SME world and how solutions are working to create healthy performance in that world, look out for PayStream’s upcoming research report on automating payables for SMEs this Q4.
creation of SupplierPay, a new partnership with the private sector that will strengthen communication between large companies and their smaller suppliers. SupplierPay is a renewal and counterpart of the Federal Government’s QuickPay Initiative and it will involve commitment from larger corporations to expedite their payments to smaller vendors, allowing those companies to free up more working capital to grow their business and hire more workers.
