Small Business Reports

business journal for business owners

SmallBusinessReports.org

updated March 2020

New Finance Sources Shift Away from Resellers

Are you with a reseller?

This year—2020—the sources in all three areas of business finance shifted toward direct relationships with small businesses, eliminating the need for resellers after decades of relying on them to serve merchants.

This major development in business finance is part of a larger emerging trend of how finance technology is dramatically improving access to capital for small businesses while also increasing security and service - and lowering costs. 

At this time, our editors are not yet ready to identify by company names the new finance sources that are shifting away from resellers because they do not want to incite friction or upset resellers whose jobs are being made obsolete. This evolving industry news will be updated regularly. 

Before 2020, finance sources for business lending, customer payments, and customer fianancing all used the same traditional business model that required resellers to recruit and serve small business merchant accounts. 

Almost all small businesses had a reseller between them and the finance source. Some merchants have the reseller of a reseller, even today, and they do not know it.  In most cases, there are too many people involved, each adding a little bit to the merchants' costs. That is how the business finance industry has operated for decades.

You might be with a reseller if you have not changed finance sources in the last year.

Resellers do not want their merchants to learn that they can go straight to the source now
for superior security, costs, and service - bypassing the middleman. 

The new finance sources do not want to upset their existing resellers that they depended on for decades and who continue to generate revenue, yet finance sources certainly do intend to switch merchants away from resellers into direct accounts in the long run.

They are doing it now with in-house sales and through finance agencies.

In simple terms, finance agencies are replacing resellers for business lending, customer payments, and customer financing.

Finance agencies represent the finance sources. They look for a good fit and smooth out the transition at zero cost to the business. They have an ongoing interest in the continued growth and long-term success of the merchant.

Businesses receive the same service, security, and costs directly from the sources with or without a finance agency, but a finance agency can make things go easier and faster at no cost.

Businesses should consider bypassing costly resellers—middlemen—to dramaticaly improve security, costs, and service directly from the source. They should compare what they have now with what new finance sources offer. It could be good for their businesses.

The reason for this industry-wide shift is finance tech. The new sources in all three areas of business finance are not the familiar names after several multi-billion-dollar mergers in the $22.5 billion  to $40 billion range in the past year.

They new sources in business finance are among the largest tech companies, and their new platforms are designed to serve small business directly and efficiently while lowering costs.

This emerging finance industry development will be updated periodically.   
- the editors