Fintech, Small Business & the American Dream describes the needs of small businesses for capital and demonstrates how technology—novel data sources, artificial intelligence, machine learning—will transform the small business lending market. This market has been plagued by frictions: it is hard for a lender to determine which small businesses are creditworthy and it is difficult for business owners to understand their own cash flow and prospects. Now the fintech innovation cycle is at an inflection point—new streams of data have the power to illuminate the opaque nature of a small business’s finances. The playing field is wide open, with technology companies like Amazon and Square, new fintech entrepreneurs, and banks—small and large—vying for a position. Fintech, Small Business & the American Dream grapples with the broad significance of small business to the economy, the historical role of credit markets, the dynamics of innovation cycles, and the policy implications for regulation.
COVID-19 will put many small businesses on life support. Karen G. Mills, who has been advising policymakers on aid options, offers guidance to owners on the brink of ruin.
Return guest, Harvard Business School senior fellow Karen Mills, is uniquely qualified to assert that the Covid-19 pandemic poses a greater threat to US small businesses than the Great Recession of 2008-2009. She directed the Small Business Administration from 2009 to 2013 and has been advising Congress and fintech companies on how to help small businesses through the pandemic. She is the author of Fintech, Small Business & the American Dream.
In the wake of COVID-19 some small businesses are closing their doors, maybe forever, but there's hope on the way in the form of the new relief package from Congress that potentially promises a brighter future. Professor Karen Mills, a former U.S. Small Business Administrator, took a quick break from actually helping to pass the bill through Congress to talk through how it can help, some of the challenges small businesses are facing during the COVID-19 pandemic and offer some advice.
As technology opens the doors to vast troves of data, opportunities are emerging to create new insights on a small business’s health and prospects. Insights from this data have the potential to resolve two defining issues that have faced lenders and borrowers in the sector: heterogeneity—the fact that all small businesses are different, making it difficult to extrapolate from one example to the next—and information opacity, the fact that it is hard to know what is really going on inside a small business.
If you’ve used Venmo, Coinbase or Robinhood, then you’ve used Plaid, whose software links users’ bank accounts to these apps. Investors include the venture capital arms of Goldman Sachs and Google parent Alphabet. Plaid’s mission is to help consumers own their banking data by being able to more easily see their complete financial picture. This goal is part of an “open banking” movement, sweeping across the fintech industry.
The former head of the Small Business Administration and current Harvard professor says data sharing can be transformational for banks.
It's very important for a small business owner to understand where their business is going, what's the customer need that they're going to meet, and how are they going to survive financially. What are going to be the resources that they're going to use to start the business? How are they going to generate the resources they need to stay in business and pay their employees? Mills notes that in the era of fintech, small businesses have more tools than ever to establish their foundation.
Former Small Business Administrator Karen Mills talks with Pedro Echevarria about her new book on technology’s impact on small businesses.
Karen Mills, former director at Small Business Administration, discusses the influence of smaller financial technology companies on big banks and how the U.S. government could help small businesses.
The former head of the Small Business Administration and current Senior Fellow at Harvard talks about her new book and how we are moving towards small business lending utopia.
Was Eastern Labs a huge success or an expensive mistake? Eastern Bank CEO Bob Rivers innovated from within by partnering with fintech entrepreneur Dan O’Malley to launch a completely automated small-business lending product. Karen Mills discusses key questions from her case study: Did Rivers have the right intrapreneurship model? Did he change the culture at Eastern? Did he make a mistake spinning off Numerated into a separate company?
David Mindell, Karen Mills and Robert Solow discuss what we can learn from past examples of massive disruption in the workforce. Which lessons apply today, and where might we be in uncharted territory.
April 11, 2018 - Karen Mills leads a discussion between Detroit Mayor Mike Duggan and JPMorgan Chase's President and CEO Jamie Dimon and Head of Corporate Responsibility Peter Scher for a discussion on cross-sector collaboration to drive economic opportunity in America's cities. The discussion, which was hosted by the John F. Kennedy Jr. Forum at the Harvard Kennedy School's Institute of Politics, looks at how partnerships like the one between JPMorgan Chase and the City of Detroit are succeeding at addressing community challenges and creating pathways to greater economic opportunity for individuals and families.
Policy Briefing: An alternative framework that focuses on the suppliers of goods and services to businesses and the government: the “supply chain economy.” Our research shows that by categorizing the economy into Supply Chain versus Business-to-Consumer industries, a different picture emerges.
Small businesses are core to America’s economic competitiveness. Not only do they employ half of the nation’s private sector workforce – about 120 million people – but since 1995 they have created approximately two‐thirds of the net new jobs in our country. Yet in recent years, small businesses have been slow to recover from a recession and credit crisis that hit them especially hard. This lag has prompted the question, “Is there a credit gap in small business lending?”
This paper compiles and analyzes the current state of access to bank capital for small business from the best available sources. We explore both the cyclical impact of the recession on small business and access to credit, and several structural issues in that impede the full recovery of bank credit markets for smaller loans.
In June 2015, 73 chief executives, mayors, governors, university presidents, economists, and thought leaders from across the political spectrum gathered at Harvard Business School to work on a question of deep and growing concern in the United States: How can our nation continue to grow while also providing a path to prosperity for more Americans? This briefing shares the highlights of the group’s deliberations.
Findings of Harvard Business School's 2015 Survey on U.S. Competitiveness
