In a Nutshell: Pitney Bowes is well-known as a shipping logistics company, but it also focuses on meeting the credit needs of small businesses. The company focuses on the market segment because many lenders overlook SMBs, even though they have the same credit and cash flow needs as larger organizations. Pitney Bowes offers a range of financial products to meet SMB needs, including lines of credit for working capital and equipment loans.
A small business may need a reliable line of credit for many reasons. For example, a holiday-focused small business could need to stock up on inventory before the busy season. Or a local bakery requires funds for an unexpected expense, like a broken oven.
Lines of credit differ from regular business loans in their flexibility.
A line of credit often works like a credit card, and businesses only pay interest on the money they use. They can draw funds up to their credit limit and have access to the full amount once again when they pay it down.
Line of credit options and APRs vary based on credit scores. Typically, lenders can offer up to $250,000, though many SMBs seek smaller amounts. APRs on lines of credit usually start at around 10% and increase from there.
Pitney Bowes is a worldwide shipping and logistics company founded more than 100 years ago. And it saw how many small business owners relied on those lines of credit to keep their operations running. That’s why the company launched a financial services sector more than four decades ago and now innovates products to meet the needs of modern entrepreneurs.
“SMBs are a vastly underserved market. They have recently gotten more airtime than in the last three decades because of programs that were launched during the COVID-19 pandemic,” said Christopher Johnson, President of Global Financial Services at Pitney Bowes.
Specifically, Pitney Bowes offers two lines of credit: Business Credit Lines and Shipping & Postage Payment Credit Lines. In addition, the company also provides business loans and equipment financing. They aim to give business owners the flexibility and continuity that consumers continue to expect in a globally connected retail world.
Helping Entrepreneurs Move Beyond the PPP Program
SMBs have historically been overlooked in American credit lending. During the COVID-19 pandemic in 2020, however, those organizations became a focus. That’s why the federal government rolled out the Paycheck Protection Program (PPP) to help keep those businesses afloat.
Essentially, the program aimed to meet the cash flow needs of SMBs by providing U.S. Small Business Administration-backed loans to companies that wanted to keep their employees on the payroll despite diminishing profits.
However, the loan program was never a permanent solution and stopped in May 2021. Still, the stopgap measure brought plenty of attention to this underserved market.
“Small businesses traditionally haven’t gotten the level of attention and access to credit from larger institutions. The PPP ran its course, but I don’t think these challenges small businesses had in accessing credit are going to go away,” Johnson said.
SMBs in the leisure, healthcare, hospitality, and manufacturing sectors still need access to funds. These businesses can also benefit from a variety of financial products, including working capital, lines of credit, and refinancing options.
“Small businesses are trying to position themselves while balancing cash flow and long-term sustainability. You see that across a myriad of sectors — during the pandemic and how they continue to operate moving forward,” said Johnson.
Pitney Bowes can help guide small businesses to the financial services options that fit their needs. For instance, if a small business already uses Pitney Bowes for shipping and logistics, it could apply for a line of credit that allows the company to pay shipping costs later. Alternatively, the business owner could opt for a Prepaid Deposit Account to cover shipping expenses.
Understanding the Needs of Small Businesses
Pitney Bowes is committed to understanding the needs of SMBs rather than working with businesses of all sizes. Its focus on this niche allows the company to understand the unique needs of the sector.
That’s why many SMBs choose to develop more robust relationships with Pitney Bowes.
“We might start financially but then move logistically to managing their receivables and payrolls. We can help them not only financially but also with some of the acumen we have in managing their expenses,” said Johnson.
One reason that SMBs may appreciate partnering with Pitney Bowes is because of the company’s multifaceted underwriting process.
“There is a part of our process that looks at company and character. Many small business owners have put their lives into creating businesses that serve their communities. We want to help those institutions that have a bit of staying power. We recognize that is a huge part of success,” Johnson said.
In addition, Pitney Bowes takes into account each client’s specific situation when assessing credit characteristics. For instance, it analyzes a client’s payment performance, cash flow, and receivables. Those factors give Pitney Bowes a more holistic perspective.
Pitney Bowes also provides a Business Credit Line, which is a revolving lines of credit.
“Borrowers pay the debt as they would any other. However, with a revolving line of credit, as soon as the debt is repaid, the user can borrow up to that credit limit again without going through another loan approval process,” according to Bankrate.
Pitney Bowes: An Innovative Financial Services Portfolio
Small businesses choose lines of credit with Pitney Bowes for a variety of reasons. Some use the funds to keep employees on payroll during slow times or prepare for the busy season with extra capital. And when unexpected expenses arise, a line of credit can also offer flexibility during emergencies.
Other Pitney Bowes offerings that benefit SMBs include equipment financing, which includes flexible capital for necessary equipment upgrades. And its business loans are designed for significant, one-time expenses or refinancing debt, rather than for businesses that need a flexible credit line.
Johnson said he believes that many SMBs struggle to operate without the cushion these financial offerings provide. SMBs may require the same support and advice larger businesses receive, though they have been overlooked in the past.
“There are less sources of capital available for SMBs. It is going to continue to be challenging to access capital. Firms like Pitney Bowes have identified this need and understand that small businesses need to have multiple sources to access capital as they move forward,” Johnson told us.
Though Pitney Bowes already has a suite of financial services geared toward SMBs, the team plans to continue expanding its offerings. Companies that start off using the company’s shipping and logistics services often become financial services customers, as well. The Pitney Bowes team wants to offer SMBs more credit and loan products.
“We’re still a young business when we think about the world of opportunity that exists in financial services. We are planning on more innovation and business model evolution. And we are excited about the long-term opportunities we see in small businesses,” said Johnson.