Covid has reshaped the future of small business banking. What this means for your business

As businesses still struggle to stay afloat despite supply chain issues, hiring challenges, and one natural disaster after another, we are also seeing a boom in new businesses. A record 5.4 million businesses were registered in the past year, meaning time is running out as entrepreneurs emerge from the nascent “once upon a time” idea stage. What will it take for these small business stories to end in a happily ever after?

According to Ben Walter, CEO of Chase Business Banking, owners are at a crossroads.

“There are a number of industries that have weathered the pandemic well and are doing better than they ever have,” Walter says. “I spoke to Joe Cruz Jr. of YaVe Tequila, for example, which had record sales in 2021, and we’re seeing a record number of new businesses launching every day. But then you have industries like gyms and food service still trying to recover.”

This “bifurcated world,” he explains, creates a disparity between who succeeds and who fails. Walter points out that successful companies will have a balance of investing in their digital backbone while emphasizing human connection. He went on to say that achieving this balance requires access to both knowledge and capital – and the numbers bear this out.

A recent Chase survey found that less than half of business owners had a mentor and 71% wanted to find one to improve their business. Additionally, separate data from 600,000 entrepreneurs on Hello Alice revealed that access to capital remains a major issue, with 89% of owners saying tight cash flow limits their growth potential and ability to manage day-to-day operations. .

These are persistent, existential issues for owners, and financial leaders are being pressured to develop their offerings to meet the present moment and elevate their biggest customers. As a result, banks and other financial institutions are becoming much more than a place for owners to stash their money with a greater emphasis on technology and customer service.

Here are three examples that show what the future of small business banking holds for entrepreneurs around the world looking for their fairy tale ending.

Business credit is key to the future of Main Street

Banks and fintech companies need to do a better job of educating consumers about the existence and benefits of business credit. A report found that 45% of homeowners didn’t know they had a business credit score; The most recent data from Hello Alice revealed that even among those already using business credit, 62% did not know how to check their current score.

This lack of knowledge presents a huge opportunity for card issuers and the business owners they serve. According to Walter, industry leaders should advocate a “more is more” approach to credit services. Ultimately, he explains, credit is credit — personal or otherwise — and that improving access to business credit adds a more important tool to homeowners’ financial arsenal. “It’s important for small businesses to remember that personal credit and business credit go hand in hand,” he says. “Companies need to think carefully about how they use different parts of the capital stack to run their business.”

I know firsthand how much access to credit can be a lifeline for a small business. It was definitely for us. Credit provides the flexibility to float payroll, cover expenses, and meet emergencies while you wait for the next influx of cash. An Ideal World puts this essential tool in the hands of anyone who wants it.

The future needs a combination of digital and human connection

Data has long shown us the major downside of the “digital divide” that holds many entrepreneurs back. Some might wonder how that could still be the case in an age where seemingly everything happens online. However, there is an obvious answer: digital tools are still not readily available and accessible.

The same Chase survey found that 82% of owners want a simple online platform to meet their needs; If they have questions, 81% said they prioritize products and services with easy-to-contact live support. Busy entrepreneurs simply don’t have time to beat the learning curve of digital solutions, an understandable if frustrating hurdle for those who know the growth potential they can unlock.

As the founder of a fintech company, I see this as a huge opportunity to create tools that meet owners where they are. Main Street is hungry for solutions that automate processes and make work life easier. If Chase is any indication, the big banks are also moving in this direction with a push for digital solutions, and individual carrier owners will need to take advantage of that.

“The way we prepare for two years from now is digitization at all levels,” says Walter. “We are investing more and more in digital advice. The perfect answer is a measured combination of human and digital. Mentoring, coaching and education are key to helping people prepare for credit.”

The Chase Survey provides a roadmap for this mix: expense tracking, personalized customer insights, business intelligence services, and access to financial advisors and mentors. Through a new mentorship program for minority entrepreneurs, Chase has hired 40 senior business consultants in 21 U.S. cities to provide free one-on-one coaching, technical assistance, and consulting services to Black, Hispanic, and Latino entrepreneurs. To date, over 1,000 business owners have taken advantage of this benefit, with thousands more to come.

Meeting customers with these convenient yet useful comprehensive services is the secret ingredient that financial institutions must embrace if they hope to drive small business growth while building brand affinity.

Institutions must prepare entrepreneurs for an uncertain future

Terms like “macroeconomic uncertainty” fail to capture just how unstable the landscape is for small business owners. Between ongoing supply chain issues and historic inflation, the uphill battle to access the capital needed to start a business looks more like a horror story. However, the overall cost of starting a business has gone down thanks to the digitization of business services.

“We’re in uncharted territory – since the 1970s that hasn’t happened,” Walter says of today’s economy. “We have to be ready for any outcome.”

For their part, entrepreneurs are digging in to deal with potential economic headwinds. Chase data revealed that 73% of small business owners feel optimistic about their long-term future, and nearly half of owners feel more positive about their business since the start of 2022. Additionally, they are massively planning to seek funds to use for hiring, training and salary increase. It all adds up to better paying jobs and a healthy economy for small businesses – if they can get the capital they need.

The future is uncertain, yes, but I am on the side of the contractors and Walter, and we are heading towards the end of the fairy tale. Small businesses are scrappy and innovative, ready to seize any opportunity and run with it. If finance leaders provide the right digital tools and adopt smart policies, we can prepare small business owners for their happily ever after.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.