During the past few years, changes in the financial services industry have put increased pressure on profits banks earn from the small-business segment.

Lower interest rates have led to shrinking margins in loans and deposits to small businesses, commonly defined as companies with less than $5 million in revenues. Competition for their business has precipitated a decline in both absolute spreads and loan quality. Those products that banks can cross-sell to this market segment, such as cash management, also have suffered fee declines in the face of competition and customers who are tougher negotiators.

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