While large banks may dominate the small business lending market, an influx of technological innovation in lending to SMEs has opened up the landscape for smaller and alternative players to compete, often together.

Indeed, collaboration is essential to combine resources and fill market gaps that the largest banks are unable to fill. This not only means having access to working capital, but it can also mean meeting the need for personalized advisory services – a feat that can be particularly difficult for large financial institutions.

Collaboration is also essential to meet the capital needs of small businesses, as Kevin van kampen, Vice-President of Commercial Banking Services at Canada’s Meridian Credit Union recently told PYMNTS. He spoke of the IFs recent partnership with alternative small business lender Thinking Capital, and the role that partnerships between FinServ providers, as well as between providers and their small business clients, play in helping the recovery and resilience of the SME community.

Drive the spirit of collaboration

Small business banking expectations are rising as entrepreneurs increasingly seek digital experiences from their financial service providers. But as VanKampen explained, digital isn’t the only item on their wishlist.

Small business owners are looking for financial products that they can access faster in a digitally-driven environment, whether it’s a desktop or a mobile device.

“At the same time, they always want to be able to talk to someone as well,” VanKampen added. “There’s a digital shift – it’s the way they want to interact – but they still want a personal touch when they need it. “

In this regard, he said, credit unions can often be more nimble than large banks in delivering this personalized experience to members of SMEs. It’s typical of the business credit union experience of developing a relationship with a member of the credit union team, and continuing to work with that person on a regular basis, for example.

This collaborative spirit between the credit union and the small business owner runs throughout UC’s landscape, according to VanKampen. Meridian’s partnership with Thinking Capital, aimed at accelerating and expanding access to capital for small businesses, is one example. At the same time, credit unions themselves often work together to share knowledge and best practices, using their collective presence to compete with the merchant banking giants.

“With credit unions, we don’t see ourselves as competitors,” VanKampen said. “We really try to collaborate, share resources and share successes. “

The next generation of SMEs

Collaboration with industry will continue to be an important tactic in meeting the rapidly evolving needs of small businesses at a difficult time in economic history.

One of the motivations behind Meridian’s Thinking Capital partnership was to accelerate access to capital for SMEs, because, as VanKampen noted, business owners need to be able to act quickly in order to seize the opportunities. most lucrative business opportunities.

“The more agile we can be in providing them with an answer, the more agile they can be in making business decisions,” he said.

That being said, the sad reality of the current economic climate is that not all small businesses will survive. This does not necessarily mean that the demand for capital for small businesses will decline, however. On the contrary, VanKampen said he sees a powerful opportunity for Canada’s small business community to regenerate and reinvent itself as economic recovery in a post-pandemic world progresses.

As such, collaboration will continue to be a vital theme for the small business lending space, including collaboration between credit unions, FinTechs, and small businesses themselves.

Looking ahead, VanKampen predicts an increase in the number of new small businesses that will come into the picture to fill in the gaps left by companies that could not survive the pandemic and economic volatility. Referring again to the Thinking Capital partnership, he noted that the merger allows small businesses that have only been around six months to access capital, unlike traditional lending models, which can typically require two years of financial statements. .

For credit unions, being able to position themselves as a resource to finance new market entrants will be essential in promoting economic recovery.

“For anyone with an entrepreneurial spirit, this will be a great opportunity to come and fill a need,” he said. “I think we’ll definitely see a lot of people going into business for the first time. “