Latest US Fintech News: Banking Giant Defaulting Millions of SMBs

The world is small, and smaller is the world of tech and business where news can travel faster than the speed of light. Last week, a fintech giant in the USA decided to take away its support back from the SMBs.

As a result, a toll took over the major social media platforms like Twitter about how this decision has left many small businesses in a ruckus and how poor the management of this banking giant is.


The Cause Behind The Effect of Ditching SMBs

To prevent naming and shaming, we will not be using the name of this Fintech Giant. However, as the phrase goes, a hint is enough for the wise.

Founded in the year of 2017, this business financing company started by supporting the start-ups and large businesses in the USA. As a banking giant, it provided them with banking facilities similar to what a traditional bank offers. The services included cards, wires, ACH, and check transfers without any extra charges which enabled many businesses to bloom.

However, the things for this Fintech giant became awry when the founders decided to onboard the brick-and-mortar businesses as well in 2020. Howsoever good the cause was, soon this corporate support faced the limitation of resources and inability of fulfilling the needs of all their customers. This lead to this sudden news of ditching small- and medium-sized businesses, shaking the Fintech world.


The Scapegoat of the Expansion Failure: US SMBs 

As per the statements made by the CEOs of this Fintech Giant, the start-ups they began with were growing faster than they expected. Their needs for expansion made it harder for the company to carry forward the usual promises made to all their customers.

In the words of the CEO, “we still had tens of thousands of small businesses with very different needs from fast-growing companies… And by spreading ourselves too thin, we couldn’t serve either small businesses or start-ups well.”

The decision of going back to the core purpose of this banking giant was made public earlier this year. However, the SMBs didn’t realize that they could become the scapegoat of the whole process. As a result they faced this dire situation.


Companies and Businesses that still have chance 

The Fintech giant, later on, clarified the situation and the process of off-boarding the SMBs. This criteria of letting go of their small and medium business customers was briefly made public in an interview. As per the new model, all the SMBs with no “professional funding” or great expansion plans will be saying bye to the banking tool offered by this banking giant.

This means they will no longer be able to use the cash management tool that worked similarly to a traditional bank account. The focus of this Fintech Giant will again be on the start-ups and large-scale businesses with a scope of great progress. This also consisted of businesses with secured funding such as accelerator funding, venture capital, or angel investors.

However, it doesn’t remove the doubt whether this Fintech Giant will still be serving these start-ups once they become small businesses? Should the start-ups start finding different partners in advance to avoid getting kicked by a banking giant in the future?


A Momentarily Relief from the Fintech Giant

To make the chaos a little less chaotic, this Fintech Giant has given all the off-boarding businesses a deadline till August 15, 2022. This means that the kicked out SMBs have a deadline to settle their card transactions and to find better partners which can focus on their needs more skillfully. In their released article, they have also given a suggestion as to who can support these SMBs after getting abandoned by them.


Having Alternatives and Why?

The support and tools given by this finance supporter allowed the businesses to have facilities similar to traditional bank accounts. They had a routing number, cash deposits from across countries, and could make transactions easily.

These features can also be enjoyed through other small business accounts or banking account services which can boost the legitimacy of your businesses. Moreover, these services help you in landing investments by combining the banking facilities with cash flow management and preparing you for tax finances.

Below are a few reasons why you need the better alternatives while getting a business bank account:

  1. You can easily be able to accept different types of cash transactions such as ACH, wire transfers, and usual cash transactions.
  2. Personal liability can be decreased by separating your personal and financial accounts.
  3. The business accounts facilitate active tracking of incomes and expenses making it beneficial for the tax season.
  4. It helps in making your business seem legitimate and can accelerate the process of getting financial support.


Where and How to start again?

What’s done is done; thus, there is nothing you can do to change the fact. But how you go about your business in the future makes all the difference.

In order to make sure you start right, here are a few things that you must take into account while going for a business bank account.

  • Your business type
  • The financial needs of your business
  • The business revenue annually
  • The number of account holders

Moreover, you must make sure that the bank or service provider you are choosing is an FDIC or NCUA-insured bank. This confirms that your money and business both are in safe hands. Additional points:

  • Check whether you have to pay fees. If yes, then how much?
  • If you have to maintain a minimum fee in your banking account?
  • Whether the bank physical or online?
  • How can you follow up on your funds and keep a track of your account?

And even after getting all these answers your favors, you might miss a better opportunity.


The experts at MAS are here for you

We at MAS can help you with landing the right partner by:

  • Helping you to compare your options
  • Providing you options with the least monthly cost
  • Getting you the banking services with no minimum maintenance balance as well as no starting fee
  • Making sure you get a service where there is no limit on transactions
  • Getting you cards that can be used like traditional Debit/ATM cards
  • And many more noteworthy benefits

To improve the benefits, we can provide you with business insights and help you with various accounting and financial needs. With this, you can lead to a positive impact on your business growth and minimize the risks of getting kicked out by a banking giant.


Written By – Priyanka Rampal


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