Mind the Gap: Your Fastest-Growing Customers Are Waiting There

There’s a segment of business customers hiding in plain sight inside almost every financial institution’s portfolio. 

They’re growing 20% a year, scaling across geographies, juggling complex supply chains and running multiple payment workflows. And the overwhelming majority of them are still leaning on personal credit cards to fund it. 

Welcome to the emerging middle market—businesses that have outgrown the “small business” label but aren’t yet “middle market” in the traditional sense. They sit in the gap between the straightforward local businesses that are easy to underwrite and the large corporates with sophisticated treasury operations.  

And despite their scale and strategic importance, this segment remains chronically underserved. During a recent panel at our inaugural Accelerate Summit, Karen Webster, CEO of PYMNTS, framed the opportunity plainly: 

“It’s a market that is underserved today by financial institutions and platforms that fail to recognize the trajectory and the velocity of these businesses,” she said. 

🎥 WATCH NOW: The Emerging Middle Market is Scaling Faster Than Its Financial Stack 

The institutions that crack the code will unlock the next era of commercial credit growth, margin expansion and long-term client stickiness. 

A Market Defined by Velocity, Not Just Revenue 

Small business and middle market are reasonably well-defined—roughly $1M to $50M for the former, $50M to $1B for the latter. The emerging middle market lives between them: too big to serve like a small business, not yet big enough to treat like a middle-market corporate. 

Look closely at the accelerating businesses inside it—companies posting 20%+ annual growth for three straight years—and the picture is striking: 

• About 43% are small-and-accelerating, growing at 21% or more. 
• The larger firms ($25M+) expect to cross the middle-market threshold in about two years; smaller ones say three to five. 
• Roughly 75% operate in tech and services—fast-growing verticals positioned to use AI to compound their own productivity. 

It’s a catalyst on top of a catalyst. These firms aren’t just riding sector tailwinds; AI is accelerating both their operations and their customers’ demand. The scale is enormous—yet the ecosystem hasn’t rallied to serve it. 

Growing Despite Their Financial Infrastructure 

The most telling finding isn’t the growth. It’s that these businesses are growing in spite of financial tools that don’t fit them. That’s the central takeaway of i2c’s research with PYMNTS Intelligence, a survey of more than 1,000 U.S. businesses generating $1M to $50M in annual revenue:  

• 43% of large accelerating firms and 36% of smaller ones say their financial infrastructure is too big for their needs. A quarter say it’s too small. 
• Only 21% use ERP systems, limiting cash-flow visibility—and leaving them with four times as many daily and weekly cash-flow hiccups as larger enterprises. 
• One in twelve still runs the business on spreadsheets. 
• 87% lean on personal credit cards for business credit. Among large accelerating firms, 30% cover half or more of expenses on personal cards. 

“These businesses are growing, making do with financial infrastructure that doesn’t really fit their business, their growth trajectory and their requirements,” Webster said. “But they’re not slowing down. They’re finding ways to work around it.” 

That last point matters far beyond the cardholder. When business spend rides on personal plastic, the issuer loses visibility into the company entirely—revenue patterns, spend categories, the real P&L. 

 It becomes a vicious cycle: no data means no clean underwriting, which means no tailored credit, which pushes the business right back to personal cards. 

Calling them Small Businesses is Costing You Millions  

Banks and credit unions continue to overlook and underserve this fast-growing middle market banking segment. Much of it comes down to how banks are organized.  

Small business and commercial typically sit in completely different silos—different teams, different underwriting, sometimes entirely different tech stacks that don’t connect until you reach the CEO. The transition point between them is precisely where fast-growing accounts get lost. 

“I worked at one super regional bank where not only were they different; they were on completely different tech stacks, completely different organizations and organizationally they didn’t meet until the CEO,” said Dan Hanks, i2c’s SVP, Global Product Management. “That step from one to the other is often where accounts get lost.”   

“The underwriting mismatch,” Hanks said, “is the core problem.” 

On the small business side, credit decisions often hang on the owner’s personal FICO score—maybe $25K or $50K, nowhere near enough to finance a company scaling toward $50M in revenue.  

On the commercial side, underwriting shifts to cash flow, inventory and corporate tax returns, usually done manually on an annual cycle. 

For a business growing 20%+ a year, an annual review goes stale fast—a firm underwritten eight months ago can look like a different company entirely. Rigid limits often exist for reasons that made sense once—a $25K cap set for an entire consumer group, for example—but those rules quietly choke the very accounts with the most upside. 

What Emerging Middle Market Businesses Actually Want 

Their needs echo consistently: 

• Dynamic credit lines and products that flex with money coming in and going out—decoupling line movement from a once-a-year underwriting event. 

• Smarter use of payment rails. Instant payments (FedNow, The Clearing House), network solutions like Mastercard Send and Visa Direct, virtual cards for supplier payments, ACH—and soon, stablecoins. Winners support multiple rails and help businesses pick the right one for each payment. 

• Acceptance and supplier visibility. “Instant” only matters if you know which suppliers accept cards and when money actually lands. 

• A partner, not a product pitch. These owners treat their banker like their accountant or lawyer—a strategic advisor. The fastest way to lose one is to call them a “small business.” 

“They look at their accountant, their lawyer and their banker as strategic advisors for their company,” said Julie Schmitz, Co-founder, Scale Solutions Group, told Accelerate attendees. “Those bankers and partners need to have a different type of conversation to educate them through all these new payment options on the table.”  

The classic “2/10 net 30” invoice term is just an older, blunter version of what variable interchange now expresses with precision: a buyer and supplier negotiating a lower rate in exchange for immediate payment. 

Mind the Emerging Middle Market Segment—and Build for It 

The lesson is simple: stop lumping the emerging middle market in with everyone else. The models built for high-touch corporates and high-automation small businesses don’t translate to the middle.  

Smart segmentation looks at three dimensions at once—revenue band, industry vertical (a construction company and a healthcare company have entirely different money flows) and lifecycle stage. 

“You really have to look at it from the perspective of the company, not all of us,” Webster said. “Because they don’t wake up thinking of all of us. You can’t peanut-butter spread over the whole thing.” 

📕 MUST-READ: How Regional Banks Can Win the Emerging Middle Market Moment 

i2c’s platform was designed expressly as an API-first issuer processor and credit decisioning engine. Dynamic, real-time credit decisioning, multi-rail money movement, virtual cards and integrated payables run from a single, unified, configurable foundation—so banks, credit unions and fintechs can design a commercial card program for this segment specifically, then adapt as those businesses scale.  

The goal is to become a place businesses grow into, not out of. 

What Leaders Can Do Now 

1. Get the research. This isn’t a market to guess at. 

2. Define this unique segment organizationally, with the right people focused on it. 

3. Audit your capabilities. Do you have the tech and dynamic credit tools to win and keep these accounts? 

4. Partner to close the gaps. No one builds everything; speed to market is the deciding factor. 

5. Embrace AI to close the data deficit—the root of the inefficiency—to finally deliver dynamic underwriting at the pace these businesses move. 

The emerging middle market is healthy, growing, employing people and driving GDP. These are the future of every institution’s portfolio. The opportunity isn’t deciding if you can win in this segment—it’s choosing when to embrace the potential.  

Ready to learn how i2c helps financial institutions build for the emerging middle market? The businesses we’ve talked about are already on the move—contact us to make sure you’re moving with them. 

Performance Check: Key Questions Answered