Navigating the financial landscape: Trends reshaping banking for SMEs in 2024

In the backdrop of inflation and uncertain business conditions, liquidity challenges and rising costs are impacting small- and medium-sized enterprises (SMEs).

Large money center banks, while predominant, seem to be neglecting the needs of smaller businesses, primarily focusing on credit card lending. This has created a void filled by alternative non-bank lenders offering credit solutions with high costs and risky terms, exemplified by Merchant Cash Advances (MCA), which require a business to pledge a percentage of its future revenue until the loan and interest are repaid.

In response to this dynamic landscape, institutions like BankFinancial are strategically aligning themselves to cater specifically to small- and mid-sized businesses. BankFinancial distinguishes itself by providing sensible credit solutions along with compelling deposit and treasury services. Their business banking and commercial finance offerings include working capital lines of credit ranging from $1,000 to $10 million to address the diverse cash flow needs of businesses, whether small- or mid-sized.

Business cash forecasting continues to be among the most inexact processes by small and large organizations alike.

Companies are seeking partners to help them navigate the shift from simple financial reporting to being able to predict highs and lows.

“At BankFinancial, our goal is to provide liquidity management tools such as high yield Insured Cash Sweep deposit products that also maximizes FDIC insurance coverage well beyond $250,000, and a full suite of treasury services that help streamline daily processes, automate payments and invoicing, improve transparency, provide real-time access to information and bolster fraud protection measures,” says, Amy Olson, executive vice president at BankFinancial.

BankFinancial’s approach extends beyond traditional banking norms. With micro-credit, asset-based lending, accounts receivable factoring products, and hybrid working capital line-of-credit products, BankFinancial offers enhanced accessibility to funding for businesses. Moreover, the product portfolio is designed to support clients not only in prosperous times but also during challenging periods.

"We believe that the best way a business can thrive in an ever-changing financial landscape is by finding the right partner — one that empowers you to navigate change and thrive well into the future,” said Tom Harris, senior vice president of commercial finance at BankFinancial.

Anticipating future developments, these trends are expected to persist as the banking industry undergoes consolidation. The emphasis on tailored services for SMEs, innovative underwriting approaches, and a commitment to supporting businesses through economic fluctuations are likely to shape the trajectory of the banking and finance sector in 2024 and beyond.