As Banks Lend Less Money, Small Businesses Need More. Why Decentralized Finance Could Be the Fix

© Getty Images As Banks Lend Less Money, Small Businesses Need More. Why Decentralized Finance Could Be the Fix

Decentralized finance is worth considering to help meet your short- and long-term financial needs.

You might have missed it, but the deadline passed a few days ago for founders to file “forgiveness applications” for phase one of the Paycheck Protection Program (PPP). The PPP was the government’s emergency response program to help small businesses keep workers employed in the Covid-19 financial fallout. If owners used the PPP funds as the program intended, they could apply to get the loan forgiven.

INC. TODAY’S MUST READS: New Research: Status Reports Can Make Teams Less Effective

However, the PPP was designed to keep workers on payroll– not keep businesses running. As the PPP sunsets, owners need other short- and long-term funding solutions to keep workers on payroll AND keep their businesses running. Decentralized finance (DeFi) could be a solution.

DeFi: fast, cheap, hassle-free funding for owners.

DeFi is a catchall term for a blockchain-based approach to banking that drives person-to-person borrowing and lending, access to high-yield investments, digital asset trading, and more. What makes DeFi unique is that the blockchain software enables smart contracts– mini computing programs– to automatically execute DeFi deals without credit checks, banking gatekeepers, or loan officers in the middle. DeFi ensures fast loan approvals, low fees, and speedy transfer of funds.

INC. TODAY’S MUST READS: How to Stay Innovative During Times of Uncertainty

Why founders are foundering financially.


Gallery: 6 crypto debit cards to consider in 2021: How to choose (Mediafeed)

For founders, DeFi is an option that’s increasingly viable as banks become less reliable when it comes to lending to small- and medium-sized businesses (SMB), especially when you consider the following:

  • Since the beginning of the year, the top-25 banks have set new lows in total lending at a time when “…small businesses and households find it harder to obtain reasonably priced credit.”
  • According to a Federal Reserve report, less than half of small businesses say their credit needs are met.
  • A report from the Small Business Roundtable found that 28 percent of surveyed SMBs stated that their biggest short-term challenge was adequate cash flow.
  • The Small Business Administration finds that more than 80 percent of businesses fail because of cash flow issues.
  • And since December 2020, an average of 30 percent of SMBs closed in the following business sectors: food/accommodations, arts/entertainment, services, manufacturing, and retail.

Founders are foundering because, rather than lending, banks are choosing to bolster their cash reserves and buy U.S. Treasuries in advance of the next market downturn. Unfortunately, many SMBs don’t have that luxury as they struggle to keep the lights on, and their employees employed right now.

INC. TODAY’S MUST READS: Open-Plan Offices Make a Comeback Because of Lazy Bosses

DeFi promises and pitfalls

While DeFi holds a lot of promise for SMBs, there are pitfalls that need to be considered as well. First, decentralized finance is not currently regulated. If your DeFi account gets hacked, the U.S. Securities and Exchange Commission can’t step in and provide recourse. But you can report crypto hacks and cyber-attacks directly to the FBI.

Second, DeFi accounts are not FDIC insured. If your funds get stolen, they’re likely gone for good. However, you can acquire your own crypto insurance to protect your stored funds.

Lastly, DeFi smart contracts are software and any type of software can have programming bugs or glitches. Sometimes those bugs simply prevent the software from running properly. Other times, bad actors exploit them to weasel their way into an account. While rare, bugs have been detected in smart contracts before. To be safe, only consider proven DeFi platforms and start with less than $100 in a secure, fiat-backed Stablecoin.

It’s worth noting that theft, hacks, and fraud do occur with traditional banking, credit cards, and financial institutions – and DeFi is similar in that regard. However, DeFi has the potential to keep small businesses moving forward on your terms, while big banking continues its steady retreat from relevance on its own terms.

Disclosure: This column’s author has investments in Bitcoin, Ethereum, Cardano, and XRP.

Internet Explorer Channel Network
News Related

OTHER NEWS

Steven Gerrard sends Rangers 'sharpen up' plea to Alfredo Morelos but boss insists striker isn't alone in misfiring

Steven Gerrard admits Alfredo Morelos is in a slump but the Ibrox boss is backing his striker to hit the heights and rediscover his deadly best form. Morelos was off ... Read more »

Brendan Rodgers reveals how Leicester stopped Cristiano Ronaldo in win over Man United

Brendan Rodgers told his Leicester City players not to be too consumed by Cristiano Ronaldo ahead of the 4-2 victory against Manchester United. The Foxes shackled Ronaldo at the King ... Read more »

Man Utd facing two contrasting scenarios ahead of crucial week for Ole Gunnar Solskjaer

After a relatively low-key start to the football season, this might just be the time when the Premier League comes alive. In recent weeks, huge heavyweight boxing fights and the ... Read more »

Ally McCoist serves for Scotland as Rangers legend to captain home team in Battle of the Brits

Rangers legend Ally McCoist will turn to tennis this Christmas – as the Team Scotland captain in this year’s Battle of the Brits. Scottish court royalty Andy and Jamie Murray, ... Read more »

'It was hard' - Sadio Mane puts Liverpool problems behind him and makes Mohamed Salah claim

Sadio Mane says the problems he encountered last season are now firmly behind him at Liverpool. The Senegal star endured a dip in form and a crisis of confidence as ... Read more »

Pep Guardiola believes Bernardo Silva could change his mind about Man City future

Pep Guardiola is hoping that Bernardo Silva’s inspired form for Manchester City will change his mind about wanting to leave next summer. Bernardo was again outstanding as City beat Burnley ... Read more »

Ruben Neves reveals what Daniel Podence told him & why Aston Villa 'cannot talk' to Wolves

Ruben Neves promised Daniel Podence that he would end his free-kick drought before firing Wolverhampton Wanderers to victory over Aston Villa. Wolves appeared to be heading for defeat at Villa ... Read more »

4 Timeless Tips for Coping With Job Search Anxiety

The “Great Resignation” has a lot of people contemplating looking for a new job. Yet, looking for a job can be stressful and produce a lot of anxiety. This can lead ... Read more »

Haiti: Notorious gang with history of brazen kidnappings blamed for abducting 17 missionaries

400 Mowozo, which loosely translates as 400 inexperienced men, controls parts of Haiti, and are known to authorities as people who carry out kidnappings, conduct car-jackings and extort businesses. Read more »

Democratic gridlock is good, says GOP Sen. Ron Johnson

Republican Sen. Ron Johnson of Wisconsin on Sunday crowed about Democratic infighting over President Biden’s massive economic plans. “I hope for Democrat gridlock,” he said on Fox News’ “Sunday Morning ... Read more »

Opinion: Why Democrats are nervous about Virginia

Democrats are anxiously following the gubernatorial race in Virginia. © Win McNamee/Getty Images Former Virginia Gov. Terry McAuliffe, Democratic gubernatorial candidate for Virginia for a second term, answers questions from ... Read more »

Salvadorans march against Bukele's economic and judicial policies

Thousands of protesters marched in San Salvador Sunday against President Nayib Bukele’s government, including the move to make bitcoin legal tender in the country. © Stanley ESTRADA People take part ... Read more »

Fans Choose Adele's ‘Easy On Me' as This Week's Favorite New Music

Adele Adele’s new song “Easy On Me” has topped this week’s new music poll. Music fans voted in a poll published Friday (Oct. 15) on Billboard, choosing the 33-year-old British ... Read more »

NFL betting: Favorites get revenge, go 7-0 in the early set of Sunday's games

The first month of the season, the NFL betting scene was filled with underdogs covering spreads.  It always evens out.  Favorites won last week and they were undefeated in the ... Read more »

Raiders pick off Teddy Bridgewater, can't turn it into points

© Provided by NBC Sports The Raiders came up with a big play to stop a Broncos fourth-down conversion attempt on their own side of the field, but they couldn’t ... Read more »

Nate Diaz May Be In Fight Limbo Until He Signs New UFC Contract

Those hoping to see Nate Diaz return to the Octagon soon against Vicente Luque or anyone else for that matter better re-adjust their expectations. According to Luque’s manager Ali Addelaziz, ... Read more »

NHL injury/news updates: Eichel, Kucherov, MacKinnon, Matthews

During the first week of the 2021-22 NHL season, there are injuries, players trying to recover from injuries, and other bits of news. Let’s round up some of the most ... Read more »

No jobs, houses or water – the people of Delft want a word with their new councillor

This year, two women from Delft won’t vote in the municipal elections for different reasons: one is frustrated by politicians’ empty promises, while a loan shark has her friend’s identity ... Read more »

Black Clover Movie Release Date, Characters And Plot - What We Know So Far

TV Tokyo Inspired by the immensely popular manga by Yuki Tabata, “Black Clover” is often considered one of the best anime shows of the past decade. The series is set in a ... Read more »

Britain faces ‘wave of terror attacks plotted by bedroom radicals'

Priti Patel, appearing on the Andrew Marr show, spoke about concerns that Covid lockdowns may have fuelled radicalisation Britain’s intelligence agencies have warned ministers of a potential new wave of ... Read more »

TSA should use dog teams to make up for workers' low vax rate: Schumer

Sen. Chuck Schumer said the TSA should use its canine teams to keep airport security lines moving. Getty Images The TSA should use its canine teams to keep airport security ... Read more »

Models have a wild time on the catwalk dressed up as safari animals

MODELS hit the catwalk in wild outfits dressed as animals from a safari trip, as they took to the runway at the International Festival of Fashion. The stars strutted their ... Read more »

John Harbaugh: Sunday's win “probably” opened some eyes around the league

© Provided by NBC Sports There was a lot of anticipation for Sunday’s game between the Chargers and Ravens, but there wasn’t much suspense once the game got underway. Baltimore ... Read more »

Odell Beckham Jr. questionable to return with shoulder injury

© Provided by NBC Sports The Browns are on the scoreboard after quarterback Baker Mayfield found receiver Donovan Peoples-Jones for an 11-yard touchdown midway through the second quarter. But they ... Read more »

Newcastle fan in stable condition in hospital; Toon, Tottenham players react

© Provided by NBC Sports Players from Newcastle and Tottenham have been talking about their reaction to the medical emergency which took place with a fan in the stands at ... Read more »

Perfect Napoli re-take top spot in Italy

Napoli returned to the top of Serie A on Sunday after Nigerian international Victor Osimhen scored the only goal in a hard-fought 1-0 win against Torino. © Filippo MONTEFORTE Nigerian ... Read more »

IATSE Strike Tentatively Averted After Deal Is Reached — But Some Union Members Aren't Happy

IATSE has averted a nationwide strike for now. © Provided by People Myung J. Chun/Los Angeles Times via Getty The International Alliance of Theatrical Stage Employees announced late Saturday that ... Read more »

Yorkshire has been crowned top spot to see UFOs in the UK

YORKSHIRE is the UK’S UFO capital, with more reports than anywhere else. Some 200-plus have been “spotted” there in two decades, including a glut this year. UFO-watchers claim they may ... Read more »

Over a million hospital appointments were cancelled because of Covid last winter, NHS figures reveal

MORE than a million hospital appointments were cancelled due to last winter’s Covid wave. Now, medics warn “everything possible” must be done to stop widespread postponements this year. January was ... Read more »

Small-town mayor to lead Hungary opposition bloc in election

1 / 6Hungary Opposition Primary ElectionConservative independent candidate Peter Marki-Zay celebrates in Budapest, Hungary, Sunday, Oct. 17, 2021, after he won an opposition primary race, making him nominee of a ... Read more »

Who Cares Wins winner, 7, who raised £100,000 for research into her condition forced to crowd-fund for care

THE family of a poorly girl who raised £100,000 for research into her condition are having to crowd-fund for her care. Carmela Chillery-Watson, seven, has a rare form of muscular ... Read more »

Major baggage system issue at Stansted described as ‘chaos'

Passengers at Stansted Airport faced long queues and temporary luggage losses after a technical issue on Sunday. The fault affected the airport’s hold baggage system, meaning that luggage had to ... Read more »

Show to go on for Malaysian Philharmonic Orchestra, but will it be the same?

© Provided by Malay Mail It will be a long time before the Malaysian Philharmonic Orchestra resume ‘live’ shows as it will only resume operations next January. — Picture courtesy ... Read more »

Macron fumes over Boris Johnson's Brexit stance and labels UK demands 'impossible'

French Government insiders claimed that the UK Prime Minister’s “populist” pro-Brexit stance and short-term agendas make any serious negotiations a fantasy. One even claimed that Mr Johnson and Brexit Secretary ... Read more »

UAE: Experts share insights on why some family businesses fail, yet some survive

© Provided by Khaleej Times UAE: Experts share insights on why some family businesses fail, yet some survive Family businesses make up more than half of the world’s gross domestic ... Read more »

UAE on road to sustainable recovery from pandemic

© Provided by Khaleej Times UAE on road to sustainable recovery from pandemic When the pandemic hit last year, the world came crashing down for countries, communities, businesses and individuals. ... Read more »

This is the beginning of the end of Covid pandemic in UAE, says doctor

© Provided by Khaleej Times This is the beginning of the end of Covid pandemic in UAE, says doctor The UAE is winning its battle against the pandemic. Covid-19 cases ... Read more »

Mahomes, Chiefs bounce back to beat Washington 31-13

LANDOVER, Md. (AP) — Teammates approached Patrick Mahomes after his second interception in the first half and maybe the worst of his NFL career. They told him to keep being ... Read more »

Syria government and opposition to begin drafting charter, says UN

© MARTIAL TREZZINI Geir Pedersen, the UN special envoy for Syria, announces the sixth session of the Syrian constitution committee from the UN headquarters in Geneva, Switzerland, on Sunday. EPA ... Read more »

Michigan judge tosses GM lawsuit against Fiat Chrysler

By David Shepardson © Reuters/Rebecca Cook FILE PHOTO: FILE PHOTO: Logo of GM atop the company headquarters WASHINGTON (Reuters) – A Michigan judge has thrown out a lawsuit that General ... Read more »