Serving small businesses in a time of crisis: How banks can help

Authored by: David Ortiz, Senior Manager; Andrew Cowley, Senior Manager; Menes Etingue Kum, Manager; Luke Van Meter, Senior Consultant; and Olivia Mikkelsen, Consultant, Deloitte Consulting LLP.

How might banks serve small businesses in a time of crisis: 5 things banks can do to address shifting needs of the SMB segment.

COVID-19 continues to spark uncertainty in the hearts and pockets of small business owners nationwide. Between February and April 2020, the number of working business owners decreased by 22 percent, the largest drop on record. Small business leaders are now forced to shift priorities and adjust to a new normal filled with personal and financial stressors.

Facing thinning staff, jargon-filled resources, and lack of support, small businesses require a new wave of understanding from their business partners—begging the question, how can these impacted small businesses be better supported by the financial services industry? Deloitte embarked on a mission to answer this question, and our findings are backed by primary and secondary research that uncovers new emerging needs and opportunity spaces.

There are 32 million small businesses in the U.S., and this segment has seen steady growth over the past five years. Although concentration varies across the country, small businesses account for over 98 percent of enterprises and play a key role in the U.S. economy by employing almost half of the total workforce. The small business segment growth has been driven by the gig-economy, with gig workers accounting for 36 percent of the US workforce today and forecasted to surpass 50 percent by 2027. Needs of this segment have been traditionally underserved by financial services.

Through Deloitte’s previous research with 26 small business owners in May 2018, we uncovered 5 universal needs of small businesses.

In May 2020, we conducted new research with 305 US small business owners and employees to assess how their needs changed in light of COVID-19. We listened as business owners tried to articulate the impact the pandemic had on the employees they considered family, and the financial hit their businesses took.

Emerging opportunities and implications for the financial services industry

The financial services industry needs to show up to small businesses differently, now more than ever before. These firms need to swiftly transform to leverage growth opportunities emerging from recent market shifts for small businesses.

Explore our insights and the five overarching opportunities for financial service firms.

Download our full report "Serving Small Businesses In A Time Of Crisis" to learn more.

Read the WSJ CMO Today article.

We'd like to acknowledge Deloitte leaders Jeff Wordham, principal, Deloitte Consulting LLP, and Gys Hyman, principal, Deloitte Consulting LLP for their leadership, commitment and contribution.