Banks Retreat, Fintech Steps In: Closing the SMB Lending Gap

By Kunal Bhasin, Founder & CEO of 1West

In today’s uncertain financial landscape, one thing is clear: traditional banks are pulling back from small business lending. Tightened credit standards, regulatory pressure, and rising risk aversion have turned many once reliable banking partners into distant observers. But where banks retreat, fintech is stepping in not just to fill the gap, but to reimagine what small business financing should look like.

We see this as a catalyst. The decline of legacy lending models has opened the door for faster, smarter, and more transparent solutions that put power back in the hands of entrepreneurs.

From Paper Trails to Portals: Why Banks Are Falling Behind

For decades, the small business lending process has been slow, opaque, and tilted in favor of the institutions holding the capital. Entrepreneurs faced mountains of paperwork, long waits, unclear terms, and unpredictable outcomes. Even as the fintech revolution reshaped consumer finance, many SMBs remained stuck in the past, until recently.

Post-pandemic pressures and interest rate hikes have only accelerated the banking retreat. Banks are focusing on larger, safer loans and leaving Main Street behind. The numbers speak for themselves: approval rates at big banks have hit multi-year lows, while demand from small business borrowers remains strong.

Technology and Trust: A New Model for Main Street Lending

This is where fintech platforms thrive. For example, our Automated Business Lending Engine (ABLE) syndicates a single application across more than 50 lenders, returning competitive offers in less than 24 hours. But tech is only half the equation. The real differentiator is trust.

Entrepreneurs need more than speed. They need clarity, confidence, and control. That’s why we prioritize side-by-side comparisons, plain-language terms, and human guidance every step of the way. In an era of fine print and hidden fees, transparency has emerged as the new currency of credibility.

Regulation, Responsibility, and Rising to the Moment

No doubt fintech’s growth comes with scrutiny. Policymakers are right to demand higher standards. At 1West, we welcome this because we know that small business lending is too important to be left unregulated, and we believe the best platforms will be those that combine innovation with accountability.

That means more than just compliance checkboxes. It means actively educating entrepreneurs on their options, helping them choose the right capital for their goals, and setting realistic expectations. Responsible lending doesn’t slow us down, it only sharpens our focus.

The Hidden Cost of Inaction

When small businesses can’t access capital, the effects are immediate and widespread: delayed growth, halted hiring, missed opportunities. And it’s often the smallest players (those with under $1 million in revenue) who suffer the most.

We’re not just financing businesses; we’re fueling resilience. Every dollar deployed on Main Street circulates through local economies, supports jobs, and reinforces the foundation of the American dream.

Looking Ahead: The New Era of Entrepreneurial Empowerment

The future of small business lending belongs to those who blend agility with integrity. Fintech is disrupting the space with better choices, smarter tools, and a lending experience that meets entrepreneurs where they are.

At 1West, we’re not just filling the gap left by banks. We’re building a bridge to a new standard, one where innovation and impact go hand in hand. As small businesses continue to adapt and evolve, their financing partners must do the same.

The retreat of traditional banks isn’t the end of an era. It’s the beginning of a better one.

About Kunal Bhasin

Kunal Bhasin serves as the Founder and CEO of 1West, a next-generation small business financing marketplace dedicated to making access to capital faster, more transparent, and more aligned with the real needs of Main Street entrepreneurs. Since founding 1West, Kunal has led the company to facilitate over $500 million in funding for more than 10,000 small businesses across the U.S. At the heart of 1West’s success is its proprietary Automated Business Lending Engine (ABLE), which streamlines a single loan application across a network of 50+ lenders. Recognized on the Inc. 5000 list of America’s fastest-growing companies, 1West operates with a customer-first ethos and boasts a TrustScore of 4.9 on Trustpilot. Kunal has built a company culture defined by transparency, hustle, and a deep commitment to helping small business owners thrive, especially when traditional financing falls short. With a wealth of industry experience, Kunal remains a trusted voice in alternative lending and fintech innovation, often offering insight into the rapidly evolving small business credit landscape.