Published: Nov. 15, 2023 at 8:00 AM EST
Setscale, a purchase order financing company, reports on small business financing, highlighting the lack of access to US government contracts
NEW YORK, Nov. 15, 2023 /PRNewswire/ — Setscale, the purchase order financing company, released today its first-ever report on US small business financing. The report surveyed US small business owners to better understand some of the financial barriers to small business ownership, including their awareness of federal government contracts for small businesses.
69% of US small businesses struggle with cash flow, preventing them from meeting the demand of government contracts.
More than half (52%) of all surveyed small business owners revealed that they aren’t aware of the specific contracts the US federal government awards to small businesses each year, missing out on approximately $84 billion* per year.
Government contracts are well-valued and often serve as a gateway to a steady source of income and small business growth. More than 70% (71%) of surveyed US small businesses say that they’re aware of lucrative and reliable government contracts, but more than half (52%) say they don’t know what specific contracts are available to them. And over a quarter of US small businesses (29%) are completely unaware that the federal government awards contracts to small businesses.
This report highlights that the federal government is investing in small businesses in record-high amounts, but business owners are still struggling to fill open government purchase orders. Almost 70% (69%) of US small businesses struggle with cash flow and working capital, preventing them from meeting the demand of a government contract. Many businesses pursue lines of credit from a bank or financial institution to fulfill purchase orders, but these are costly and hard to obtain. Alternative finance like purchase order financing can help these businesses secure and fulfill valuable government contracts.
Moreover, US small business owners say that a lack of cash flow and working capital prevents them from securing government contracts. At 22%, a lack of cash flow or capital is the second most popular reason that prevents US small business owners from securing a government contract. The most popular reason they aren’t securing government contracts is due to a lack of time and resources (25%).
“Our small business financing report sheds light on an issue that more than half of surveyed business owners know all too well – that even though the US federal government is awarding a record number of contracts to our small businesses, they’re still struggling financially to fulfill open purchase orders, potentially losing out on more than $80 billion each fiscal year,” comments Daniel Fine, Founder and CEO of Setscale.
“Government contracts are fierce competition for US small business owners for a reason. They’re reliable, well-valued, and often lead to steady sources of income. However, due to a lack of knowledge of the specific government contract awarding process, business owners are unsure if they can fulfill the government’s open purchase orders without pursuing a line of credit from a bank or financial institution,” elaborates Fine. “With interest rates at an all-time high, it’s an incredibly bad time to be a borrower. PO financing allows a small business to quickly bid on a contract, finance the full transaction, and scale operations to meet the size of the order.”
To read more about Setscale’s small business survey and for resources about government contracts for small businesses, click here.
*In Fiscal Year 2022, the US federal government awarded $162.9B in federal contracting opportunities to small businesses. 52% of surveyed US small business owners reported that they aren’t aware of the specific contracts the US federal government awards to small businesses * $162.9B = $84B in lost opportunities.
Setscale designed and executed research for this report in collaboration with Censuswide. 251 US small business owners in companies with less than 50 employees (aged 18+) were surveyed online in October 2023. Censuswide abides by and employs members of the Market Research Society which is based on the ESOMAR principles.
Setscale is a fintech startup solving the trade financing dilemma for small businesses. Small businesses frequently get purchase orders, but don’t have the money to fill them. Through its PO financing technology, Setscale finances the cost of those goods, allowing small businesses to focus on product and sales, enabling them to scale. Setscale is an ideal partner for SMBs, coming in where traditional financial institutions won’t, enabling SMB’s to finance their growth. Setscale funds supply. You meet demand.
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