82% of Fast-Growing Firms Demand Flexible Credit
Fast-growing middle-market companies aren’t always losing opportunities because lenders said no. Many are losing them because available credit can’t move quickly enough to become useful. That gap sits at the center of “The Emerging Middle Market: When Credit for Fast-Growing Companies Isn’t Really ‘Credit,’” which finds that 85% of accelerating larger firms say they have […] The post 82% of…
82% of rapidly expanding firms seek adaptable credit arrangements, as highlighted in the report "The Emerging Middle Market: When Credit for Fast-Growing Companies Isn't Really 'Credit.'" Many are forfeiting growth opportunities due to credit that cannot be mobilized swiftly enough. While 85% of these companies claim sufficient credit, 46% frequently or frequently miss growth opportunities due to inadequate credit, nearly three times the rate of established larger firms.
The core issue lies in the speed of credit approval. Forty-one percent of accelerating larger firms cited slow approvals as the primary obstacle, making it the most common barrier in the study. This is a significant concern for companies that can rapidly change their trajectory while older records may still describe a smaller business.
Underwriting often relies on historical data, making it challenging for fast-growing companies to secure timely financing, even if their current sales and payment activity indicate a stronger future.
Credit score requirements and profitability or cash-flow requirements also pose barriers, affecting 39% and 36% of these firms, respectively. Both measures favor companies with a long credit history. Direct links to accounting, payments, and reporting systems could provide lenders with more up-to-date information, potentially closing the timing gap.
Notably, 30% of executives at accelerating larger firms rely on personal credit to cover at least half of their business expenses. This suggests that personal credit may sometimes provide funds more rapidly than business credit. A more flexible and faster commercial credit option could enable more borrowing within the company, aiding in the development of its financial record.
The demand for faster, more flexible credit access is evident. Eighty-two percent of accelerating larger firms prefer such access, even if it means lower-cost credit. Providers may not need to create entirely new products; instead, they can improve approval speed, update reviews more frequently, and allow credit limits to grow with the business.
The report, a collaboration between PYMNTS Intelligence and i2c, cautions against treating the middle market as a homogenous group. Among accelerating smaller firms, 20% prioritize cost over flexibility, twice the rate of accelerating larger firms. Tailoring credit solutions to the specific speed, size, and stage of each company is crucial for meeting their evolving financial needs.
Written by urgent.news from PYMNTS's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
