How Fintech can help you weather a recession

managing director at Novaeaccelerate the revenue of businesses with consumer financing, corporate financing and credit building services.

Our economy is in turmoil. We have weathered a global pandemic better than many predicted, but with key economic indicators suggesting a recession may be imminent, many are feeling financial anxiety.

The good news is financial technology that can help us stabilize our finances and grow our businesses is available to anyone with a computer interface. As the CEO of a fintech company, I see financial technology developing at an astonishing pace, and many new tools have yet to be widely publicized. In this article, I will discuss several uses of fintech that managers should be aware of during a recession.

Use AI disputing software to boost your credit.

Credit reports are now used by banks, landlords, car companies and even employers to determine how trustworthy a person is. Unfortunately, a 2021 survey by Consumer Reports found that more than one in three Americans have an error on their credit reports. This can be costly if it damages people’s scores or opens the door to identity theft. However, some software companies are working to make the process easier by using artificial intelligence.

Anyone who has tried to dispute items on their credit report knows that this process can be exhausting and frustrating. Credit bureaus have 30 to 45 days to respond to most dispute requests, and the answer is often “no.” When requests are denied, it may be necessary to use specialized legal jargon in a series of supplemental letters to achieve a successful resolution.

For example, a number of companies (including mine) offer AI credit dispute apps that know this jargon and can instantly provide consumers with a response letter that can be sent if credit bureaus decline your initial dispute request. AI credit dispute software is best for those with potential errors on their credit reports. Some solutions come with services like credit monitoring alerts, identity theft insurance, and dark web monitoring to let you know if your confidential data is being found for sale by hackers. (Full disclosure: My company offers some of these services.) Compare the additional services these companies offer to ensure you choose the best one for your needs.

However, please note that these apps may take a few months to show results due to the response times allowed by credit bureaus and the fact that multiple rounds of dispute-and-response may be required to achieve success. Therefore, they may not be the right choice for those who need to resolve inaccuracies quickly.

Invest in consumer finance.

Whether you are a business owner or a consumer, you should consider “buy now, pay later” (BNPL). BNPL technologies work by having third-party lenders such as banks finance customers’ purchases. These lenders pay you the full amount and then collect payments from customers over time.

BNPL has exploded in popularity as it has become clear that companies with BNPL options are seeing huge increases in sales. This technology can be especially useful in difficult economic times because it can allow consumers to continue buying even if their cash flow is temporarily interrupted.

In recent months, risks linked to BNPL, such as fraud, have come to light. For this reason, when seeking BNPL services as a business owner, look for those that work with lenders to pay you money upfront and then collect from consumers later. This ensures that you get paid in full even if there are problems further down the line.

Some have also raised concerns that BNPL may be helping consumers get into financial trouble. I advise consumers to consider only using BNPL to purchase items that will improve their financial performance in the long run by saving money over time or improving performance. When used in this way, BNPL can combat wealth inequality by allowing people who are not already wealthy to invest in their future.

Seek out grants.

Have you ever thought about applying for a business grant? There may be funding entities that consider your business important to the health of the economy.

Many grants are offered from city, town, state, and federal governments, as well as private nonprofits and think tanks. Grant funding agencies may seek to support local businesses, create jobs or promote renewable energy, technology and innovation. Between these assignments, most small business owners and many larger businesses can qualify for grant funding.

With many fearing a recession, an increasing number of businesses need grant funding, and there are not many search engines that catalog the grants offered by thousands of organizations. Very few opportunities are on the market that offer fintech services to help growing businesses with this catalog of offerings.

In general, there is no risk in applying for a grant. Grants don’t have to be repaid, and applying for them doesn’t affect your credit score, so the worst the grant agency can do is say “no.” Make sure you understand the tax implications of any grant you apply for. Do you have to pay tax on the scholarship money as if it were income, or is the money tax-free?

Fintech is making our world more connected than ever before. While this means we can be negatively affected by events happening a world away, it also means we are more prepared to catch each other if we fall. The options described in this article are all means of doing just that, allowing us to care for our own economic health and the health of consumers, while creating greater access to financial resources provided by governments and philanthropists.

Just knowing these options exist and finding them can give you the ability to change your financial future in a time of crisis.

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