Preserving SMB Loyalty: A Whitepaper on Declining SMB Loyalty to Financial Institutions

Lehi, UT – Mar 24, 2025 - Lendio, the leading small business financing platform, has released a new whitepaper uncovering key insights into small and medium-sized businesses’ (SMBs) lending preferences. Titled The Loyalty Cliff: Serving SMBs in the Era of Lending Transformation, the whitepaper details how access to capital is becoming a primary driver in banking decisions for SMBs.

Based on surveys conducted by Lendio across Q3 2024 and Q1 2025, 67% of SMB owners have no preference for who they secure a loan from. These businesses prioritize lending options that offer speed, flexibility, and digital accessibility over options that come from a relationship with an established financial partner. Notably, 53% prefer to apply for loans completely online, but only 29% of large banks and 8% of smaller banks offer digital solutions for loan applications.

With SMB loyalty to traditional banks as their primary lending partner on the decline, the whitepaper identifies key factors driving this trend:

• Digital Accessibility Gap: The majority of SMBs prefer online applications, but many traditional banks have been slow to adopt financial technology for end-to-end digital lending.
• Speed Expectations: 50% of small business owners won’t spend more than 60 minutes on a loan application at their primary bank before looking elsewhere, and 41% expect to receive funding decisions within a single business day.
• Unmet Lending Needs: Among SMB owners who considered switching banks, 39% cited unmet business lending needs, making traditional banks’ limited offerings a key driver of deposit migration.

“Credit access has emerged as the pivotal factor in maintaining SMB depositor loyalty,” said Philip Taliaferro, Chief Growth Officer at Lendio. “The recent rate run-up and the Silicon Valley Bank collapse have driven a dual shift: business owners are sharpening their focus on savings yield, and banks are increasingly demanding that new lending relationships also translate into deposit commitments. Leading institutions are now leveraging sophisticated analytics to identify and support at-risk deposit relationships. By integrating deposit primacy with lending, banks will not simply react to market pressures, but strategically position themselves for sustainable growth in a rapidly evolving financial landscape.”

The whitepaper's findings highlight opportunities for banks and financial institutions to reclaim SMB loyalty by making critical updates to their lending processes. Adopting digital technologies, streamlining loan approvals, and enhancing communication around available products are pivotal steps financial institutions can take to strengthen their relationships with SMB clients.

How Lendio Supports SMB Lending Transformation 

Lendio’s robust technologies enable banks to overcome these challenges. Through its Intelligent Lending™ platform, financial institutions gain access to features like digital loan applications, automated data sourcing, and configurable loan policies to meet SMBs’ rising expectations for speed and accessibility.

Additionally, Lendio’s Embedded Marketplace™ allows service providers to integrate Lendio’s powerful loan recommendation engine directly into their ecosystem, expanding access to convenient financing options for SMB owners.

"Our latest findings shed light on the urgent need for lending innovation to meet the demands of the modern SMB,” said Brock Blake, CEO of Lendio. “By investing in the right tools and adapting to the preferences of small business owners, financial institutions can avoid tumbling off the loyalty cliff and strengthen their position as valued partners in business growth.”

To download the full whitepaper and explore Lendio’s solutions for future-proofing SMB lending, click here.

About Lendio 

Lendio is transforming small business lending by connecting small businesses, lenders, and service providers through a single integrated technology platform. Lendio’s mission is to power an ecosystem that helps small businesses survive and thrive. Lendio provides purpose-built software that automates small business loan decisioning and underwriting for both banks and digital lenders, uses AI to match small businesses to the financing offers that best meet their needs, and embeds a full small business loan marketplace directly in service providers’ platforms - all of which work together to get entrepreneurs access to the capital they need. For more information, visit www.lendio.com. 

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