Rethinking SMB credit

Small and mid-sized businesses (SMBs) are the economic heartbeat of the communities credit unions serve. They’re the restaurants, contractors, salons, retailers, nonprofits, and service firms that create jobs, stabilize neighborhoods, and fuel local growth.

Yet when it comes to credit, their needs today look very different from even a few years ago.

The newest SMB Growth Monitor: Small Businesses, Big Credit Needs—a collaboration between PYMNTS Intelligence and i2c—reveals that SMBs aren’t struggling to find credit. They’re struggling to find credit that fits them.

And that’s where credit unions have a unique opportunity to lead.

Rather than competing on access, credit unions can compete on adaptability—building business credit experiences that flex with cash flow, support growth, and give business members more control over how they spend. This is exactly where SMB expectations are headed—and it’s a place where the credit union model naturally excels.

Perhaps the most striking insight from the research: 83% of SMBs believe they’d be approved for a new business credit card. Among larger SMBs earning over $1 million annually, that number jumps to 96%.

As Seth Perlman, Global Head of Product at i2c, observed during a PYMNTS On-Air roundtable discussion called The SMB Fast Lane: Big Credit Needs, Bigger Growth, this confidence is meaningful.

Perlman noted that SMBs are entering the credit process expecting a “yes,” not anxious about being turned away. But optimism creates a new competitive reality. SMBs aren’t comparing issuers based on approval odds—they’re comparing them based on value.

“More than eight in 10 SMBs assume they'll be approved for a credit card,” he said. “The real competition is no longer about, ‘Can I get a card?’, but ‘Is this a card that's built around my business?’”

For credit unions, this is good news. The foundation isn’t who can approve a business, but who can understand it—and provide tools that actually support how it operates.

Despite a common misconception, SMBs don’t treat business credit as a last-minute lifeline. In fact, the data shows the opposite.

This reveals something credit unions should understand deeply: business owners plan their spending carefully, but need flexibility for the moments they can’t plan for.

Perlman described this balance well, noting that not all SMB spending fits neat, predictable patterns.

“I wouldn't necessarily call it an impulse purchase in the same way that consumers do,” he explained. “It's more spontaneous—or maybe it's more out of pattern—for larger or urgent expenditures.”

Because some spend is unexpected, SMBs gravitate toward tools that help them handle the unexpected without friction.

And that’s where flexibility becomes a differentiator.

When SMBs were asked which credit card features they would actually pay for, the results weren’t even close:

Why such enthusiasm for flexibility?

The answer is simple, Perlman said—rarely do small businesses see a perfect pairing between their expenditures and their revenue.

This mismatch between when money goes out and when money comes in creates constant pressure—and credit tools can either ease that pressure or magnify it.

“The name of the game is to ensure you've got the right line assigned at the right time, with the confidence that the revenue will then follow,” he said.

Credit unions offering cards that adapt—rather than those that stay static—can deliver tremendous value to business members.

SMBs continue to rely heavily on personal credit cards when business products don’t meet their needs:

This is risky for the business owner and reduces visibility for the credit union. It also signals an unmet need: SMBs want tools that allow them to keep business and personal finances cleanly separated.

Virtual cards are one of the easiest ways to fix this and they’re becoming a standard expectation.

“As a processor, virtual cards are absolutely something we enable,” Perlman said. “It’s probably the cleanest way to segment or maybe contain, that unplanned spend.”

A flexible business card program—with virtual accounts for employees or categories—can pull that spending back where it belongs.

The report highlights that SMBs are far more interested in dynamic credit products than in traditional ones.

More than half want tools like:

This indicates a growing expectation that credit lines and repayment structures shouldn’t stay static—they should “breathe” with the business so issuers can stay ahead of the needs of small business owners.

“The credit line assignment . . . is not one-and-done, often the way it is with consumers,” Perlman said. “It's something that needs to be adjusted over time based on projected cash flow, seasonality of the business and overall relationship.

“You'd rather be able to proactively make those adjustments . . . giving those types of tools both to the issuers and to the businesses themselves to really manage their credit limits and breathe with the business.”

This approach aligns perfectly with the credit union philosophy: relationship banking, not transactional banking.

The new SMB credit landscape presents three clear opportunities for credit unions:

By providing configurable tools and human-centered guidance, credit unions can become trusted financial partners, not just lenders.

SMBs expect more from credit today—more flexibility, more control, and more alignment with how their cash flow actually works.

They’re not looking for the lowest rate or the fastest approval. They’re looking for credit that adapts, evolves, and helps them navigate the realities of running a business.

Credit unions—relationship-driven, community-rooted, and service-oriented—can deliver exactly that.

The data is clear—the next wave of SMB credit isn’t about who says “yes”—it’s about who supports the business after the yes. And with the right tools and flexibility, you’ll be uniquely positioned to lead that wave.