Two things that united us during the pandemic were the recognition that small businesses are the lifeblood of our communities, and our collective determination to keep them afloat. They are key to economic vitality – and must be at the center of strategies to jump-start national economies in the emerging post-COVID-19 economy.
But in our rapidly evolving world, small business owners need enhanced ability to receive and make payments more quickly and easily, better access to capital and the tools and expertise to digitize their operations and more efficiently run their businesses.
And small and medium-sized enterprises (SMEs) in the business-to-business space, an often overlooked segment despite payment volumes totaling almost three times that of consumer spending, have fallen behind in digitalization and require more support to stay competitive in an increasingly global economy. Addressing this challenge represents an opportunity to capitalize on the downstream effects it can have on the SMEs that buy from and supply to those B2B businesses, further expanding the reach and impact.
The good news is many governments are stepping up to the plate. The Business Development Bank of Canada has supported the cash flow of small businesses by not only providing them with working capital loans to bridge cash flow gaps and support operations, but also offering purchase order financing with flexible terms to help them fulfill domestic and international orders. In Chile, policymakers established the “Digitize Your SME” program, which helps small business suppliers connect with buyers, providing a tool co-created with the Inter-American Development Bank that helps business owners assess their level of digital maturity. It also offers webinars on making the best use of technology, among other initiatives.
These are just a couple examples of the roles governments can play and policy tools they can employ to support these businesses. In a new white paper, “Reimagining support for small businesses: The path to creating stronger and more resilient small businesses through and beyond COVID-19,” Mastercard’s Policy Center for the Digital Economy and Kearney’s Global Business Policy Council have identified four roles governments can play to strengthen resilience, with focus on business-to-business (B2B) small businesses. These are accompanied by eight broad policy objectives supported by tangible calls to action and local market examples of best practices.
01 Conduit for and enabler of working capital and funding
This role has been especially important amid COVID-19 to keep small businesses going. By easing cash flow burdens and removing barriers that hinder the ability to receive capital – particularly for women business owners and entrepreneurs of color who have been hit disproportionately hard – governments can help small businesses operate on a day-to-day basis. Many B2B businesses need support for basic digitalization efforts, or risk being shut out of the global opportunities.
As small businesses become increasingly digital – and as cybercriminals increasingly see them as targets – governments can ensure a safe and secure operating environment with regard to cybersecurity, trust and transparency. Free or subsidized cybersecurity tools, for example, would make them far less vulnerable, not to mention safeguarding the data of their own customers and consumers.
There are financial and digital tools out there, but many small business owners – already overburdened with the task of keeping their doors open – may not be aware of them. In addition to raising awareness of these resources, governments can also create opportunities for connecting entrepreneurs to one another for knowledge sharing and business growth.
04 Convener and connector
Everyone has a stake in the vitality of small businesses. Governments can bring together – and incentivize – other players, including private companies, non-banking financial institutions, development finance institutions and non-governmental organizations, harnessing their collective expertise to support cash flow management, capital and digital services to B2B businesses.
These are just some of the ways policymakers can act – and this is just the starting point. Governments can build connections and dialogue with trade associations to understand small and medium B2B business pain points on a deeper level – and to build a broader ecosystem of support alongside trade associations, with the multilateral organizations and with other governments.
As the world moves out of the COVID crisis, governments and the private sector have a great opportunity to empower SMEs to not only survive, but to thrive and position themselves to better adapt to an ever-changing economic environment. Now is the time to spark a dialogue among the public and private sectors alike on policy mechanisms and action-oriented best practices that can best increase the resilience of small businesses.
Download a copy of the full whitepaper here.
This article was written by Ravi Aurora, Executive Director for Global Policy Affairs & Community Relations at Mastercard
For more insights from Mastercard, visit their
Knowledge Partner Hub