Door to a bank vault

The Changing Role of the Commercial Banking System

Last Modified : Jun 14, 2024

Fact-checked by: Bruce Sayer

During 2020 the government and the commercial banking system responded quickly and empathetically to provide assistance and credit with flexible terms to business customers. But this benevolence can’t be sustained. Current uncertainty is exposing the weakness of conventional underwriting models forcing banks to reevaluate commercial portfolios.

As the pandemic subsides and economic recovery begins, small business companies will start the long journey back to a new normal. This continuing period of poor performance profiles and high-risk environment transforms even the most appealing small business bank customers into an underwriting nightmare.

In 2021, banks will change roles from being distributors of government-sponsored relief packages to advocates of ardent risk management.

To retain customer loyalty, banks must continue to advocate for their customers’ financial well-being. As banks withdraw from small business lending, they must refocus and drive customer engagement with other value-added services. What many small business owners really want in the year ahead is advice on how to navigate the remainder of the pandemic, and how to operate in the recovery beyond that. Bank representatives need to become relationship managers and branches need to become a place for meaningful conversations and trusted advice.

Small Business Banking Needs

Small business employs almost half of the nation’s work force. Supporting this demographic is more than tapping into a significant market, it’s essential to overall economic recovery. At present, large businesses are getting loans at some of the lowest rates in decades while small business companies struggle just to find a lender. Without access to credit, these businesses will be unable to rehire employees, restock their shelves and drive the economic recovery that is so desperately needed.

As the pandemic ravages social and economic conditions, it is inspiring to recognize the resilience of the country’s entrepreneurial spirit. A recent survey revealed that 83% of small businesses had an optimistic view of 2021. As encouraging as this is, we need to look ahead and anticipate the next challenge.

The pandemic will continue to affect sales and profits well into this year keeping small business in jeopardy. Banks’ pending mass exodus from small business lending seems ill timed, in fact it isn’t. Ultimately, this opens the door to a win-win-win scenario benefiting small business clients, the banks and alternative lenders. The banking system’s withdrawal from SBLs serves to open the marketplace even further to non-bank lenders who are more than ready to fill the gap with lending solutions designed specifically for middle-market borrowers.

ABOUT eCapital

Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.

We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.

eCapital Logo

eCapital Corp. is committed to supporting small and middle-market companies in the United States, Canada, and the UK by accelerating their access to capital through financial solutions like invoice factoring, factoring lines of credit, asset-based lending and equipment refinancing. Headquartered in Miami, Florida, eCapital is an innovative leader in providing flexible, customized cash flow to businesses. For more information about eCapital, visit

More Great Reads