U.S. companies generating between $1 million and $50 million in annual revenue are experiencing significant growth, with a substantial portion anticipating crossing the $50 million threshold between 2029 and 2031. This dynamic segment, which PYMNTS defines as companies in the $10 million to $50 million revenue band, plus high-growth firms under $10 million on a trajectory to exceed $50 million within five years, presents a substantial opportunity for regional banks. However, these firms often find themselves in a challenging gap, lacking the sophisticated treasury systems of large enterprises while outgrowing the simplified products designed for smaller businesses.
The Emerging Middle Market’s Infrastructure Gap
The core challenge for these scaling businesses is not a lack of ambition, but a deficiency in the right infrastructure. Seth Perlman, global head of product at i2c, and Julie Schmitz, co-founder of Scale Solutions Group, highlighted in a panel discussion that these companies are transitioning from owner-led operations to more structured finance functions, often hiring their first Chief Financial Officer (CFO). This transition introduces new demands for credit, payments, and advisory services.
Schmitz noted that this segment values proximity and trust, with companies willing to relocate their entire banking relationship to follow a banker who understands and supports their business. Yet, these relationships are increasingly strained by outdated systems. Perlman explained that financial stacks built for companies at $3 million or $5 million in revenue, typically relying on a single point of oversight and a limited set of systems, break down as complexity increases. ‘The stack assumes that you’ve got one person that can see everything,’ Perlman stated. ‘But once you start growing faster and adding that complexity, the business will reach a point where they just can’t.’
This breakdown is often evident when a CFO struggles to ascertain the firm’s real-time cash position without manually aggregating data from multiple disparate systems and spreadsheets. Research from PYMNTS Intelligence and i2c indicates that fewer than one-third of larger, fast-growing firms have implemented Enterprise Resource Planning (ERP) systems, even as many continue to rely on legacy accounting platforms.
Credit Access Mismatches and Operational Friction
The disconnect is particularly acute in credit underwriting. While companies report adequate credit availability on paper, nearly half indicate they miss growth opportunities because the credit is neither flexible nor timely enough. Perlman pointed to underwriting models that are built on historical performance rather than future potential. ‘Those underwriting models were really built for firms where next year is probably going to look a lot like last year,’ he said. ‘But for those fast-growing businesses, their next year is never going to look like this year or last year.’
High-growth firms frequently reinvest profits, which can limit the clean historical profitability that traditional lenders seek, thereby restricting expansion capital precisely when it is most critical. Even when credit is available, operational fragmentation within banks adds further friction. Schmitz described persistent difficulties in integrating card programs, accounting systems, and online banking interfaces, leading businesses to manage multiple logins and reconcile transactions manually.
‘This is a reality we still live in,’ Schmitz commented, emphasizing that system integration issues hinder adoption. The reliance on manual processes delays decision-making and obscures financial visibility.
FinTech Solutions and Bank Partnerships
FinTechs have made strides in bridging these gaps, particularly by embedding data flows into payment systems. Banks are increasingly turning to partnerships to address the disparity between their legacy infrastructure and client expectations. Data reveals that companies with the highest growth rates often possess the least mature financial infrastructure, with a strong demand for better integration across payments, credit, and accounting systems.
Perlman outlined a three-pronged solution: real-time visibility into payment flows integrated with accounting systems; dynamic underwriting based on current cash flow and transaction data; and flexibility on the payable side, including tools like supplier-linked virtual cards and adjustable spending controls. ‘These elements,’ he stated, ‘are the stack.’
Schmitz provided a practical example of a rapidly expanding veterinary network that initially used virtual cards for ad hoc purchases by office managers. The program evolved to include supplier payments, shifting expenses like medical supplies to card-based workflows. This initiative improved working capital management by extending days payable outstanding while ensuring timely supplier payments, stabilizing cash flow across multiple locations. The key takeaway is incremental adoption, starting small and expanding as processes mature.
The CFO’s Perspective and Future Outlook
For finance leaders, the focus is on control and resilience rather than simply the cheapest payment method. Perlman advocates for a blended approach: virtual cards for flexibility and data capture, instant payments for time-sensitive needs, and ACH for predictable recurring expenses. He advised that CFOs should consider which payment methods support working capital and supplier health.
Regional banks have an opportunity to diversify revenue beyond interchange fees by cultivating broader relationships encompassing lending, deposits, and payments. Both Perlman and Schmitz anticipate a shift from fragmented tools to unified platforms. Perlman foresees current ‘collections of tools’ evolving into integrated systems that combine payment orchestration, expense management, and credit decisioning, all linked by shared data frameworks.
Schmitz stressed that community and regional banks are well-positioned if they invest in partnerships and integration. ‘They don’t have the technical teams in house to build out everything,’ she acknowledged, but can compete by combining advisory relationships with modern infrastructure. The emerging middle market is advancing rapidly, and financial institutions that adapt by offering integrated solutions and strong advisory support will secure these valuable commercial banking relationships for years to come.
