Social inclusion is defined as the process of improving the terms on which individuals and groups take part in society. Businesses can facilitate better social inclusion by extending their entity, growing larger, and creating more opportunities. This topic has become more important after the onset and continuation of the COVID-19 pandemic. Countless people lost their jobs and were forced back into a disavdtanged state. As a result, social inclusion was decreasing rapidly, but the dire nature of the situation made social inclusion difficult to improve. The team at LinqPal is here to show how greater access to working capital can help boost and enable social inclusion.
The Importance of Working Capital
Working capital is the money available to meet your current, short-term obligations. Working capital encompasses many aspects of your business, like paying employees, paying for bills, and facilitating project development. Greater availability of working capital will equate to greater business growth, and vice versa. However, universal access to working capital has yet to be attained, placing greater pressures and disadvantages on small businesses, especially those that are owned by minorities. This has only begun to change recently, with new laws being created to allow more people the financial resources they need. Many institutions have also started to recognize the individuals who have often been neglected. Rather than denying these people access to more capital, institutions understand the role that small businesses play in the economic and financial arenas.
The Relationship Between Working Capital and Social Inclusion
Improved social inclusion equates to greater opportunities for small businesses. When you consider the limitations of SMBs, including limited access to capital, this topic becomes even more important. But, how exactly can greater access to working capital create better social inclusion and, thus, more opportunity?
Well, working capital is one of many financial resources. More capital means more projects, increased company size, greater opportunity, amongst others. By gaining more access to working capital, institutions can work to include those who are disproportionately affected by financial hardships. We see this in new laws that have been created to facilitate recognition of immigrants by financial institutions, which has helped promote better social inclusion.
Before these laws were enacted, there also came a change in the paradigm and a recognition of great potential in these minority groups. One of the greatest movements that started identifying the importance of bringing onboard to the financial ground base of the pyramid businesses was micro-financing. This new focus in serving the under-served showed success for both ends, since on the minority/underserved/excluded segment it enabled them to grow their business and achieve financial stability. It gave them the resources they could not access before, allowing them to become self-sufficient. Additionally, on the financing side, it proved that these communities had great potential, can achieve growth and financial stability, and were great financial consumers, quickly adapting and keeping good payback standards. These resulted in a profitable business with a very important focus: enabling social inclusion through access to working capital.