The Real Problem Is Process

Most lenders will tell you it's difficult to lend to small businesses. ​

Today, small business lending is incredibly slow, manual and painful for everyone involved. The process typically unfolds through slow back-and-forth exchanges via email, with documents such as tax returns and financials collected piecemeal and reviewed manually.

At some point, an underwriter is sitting there with two screens—one with PDFs, one with a spreadsheet—typing numbers from one into the other.

That’s not a system that can handle large numbers of loans.

It’s created a trifecta of problems. It’s slow, expensive and a poor customer experience. The business owner doesn’t know where they are in the process. They’re waiting months for the deal to be done. And the reality is, most of them give up halfway through the process.

From the lender's perspective, it means spending months working on deals that will never be closed. And it means that lending to small businesses is no longer profitable—not because the loans are bad, but because the process is broken.

SBA Lending Expands Access But Adds Complexity

The U.S. Small Business Administration (SBA) plays a critical role by enabling lenders to fund businesses they otherwise couldn’t, such as first-time founders, new restaurants and higher-risk ventures.

With government guarantees covering 50% to 85% of the loan, banks can say yes to more businesses. That’s a good thing. It democratizes access to capital and supports economic growth.

But it comes with a tradeoff.

SBA lending is one of the most complex loan programs out there. The rules span hundreds of pages and are constantly evolving. There are updates, procedural notices and compliance requirements that lenders need to stay on top of at all times.

So, while SBA loans make lending more accessible and potentially more profitable, they also make the process even more labor-intensive.

Unless you fix the operational side of lending, SBA doesn’t solve the problem. It just adds another layer of complexity on top of it.

What Happens If They Lose

If community banks continue to lose ground, the effects will not just be felt in banking; they’ll be felt on Main Street.

Currently, small business owners have two choices. They can turn to a trusted community bank for affordable, long-term funding. Or they can turn to an online lender for quick access to cash at extremely high interest rates.

Too often, that second option leads to a debt spiral. Business owners borrow money at high interest rates, and then they need more money to pay off the first loan. Eventually, it becomes unaffordable.

I’ve spoken to business owners who have said that without an SBA loan from a community bank, they would have lost everything, including their business, their employees and their suppliers.

When a small business fails, it’s not just the business owners who suffer. It’s the employees, it’s the suppliers, it’s everyone.

Small businesses are the backbone of our country. They are the fabric of our economy. If they start to disappear, that fabric starts to unravel.

What A Better Model Looks Like

The solution is straightforward. A scalable model comes down to three things:

First, you need an easy online application. Business owners should be able to apply on their own, without endless email chains. When lenders offer that, conversion rates increase dramatically, often by four to 10 times.

Second, you need automated underwriting. Instead of manually reviewing documents, systems should read financials, extract key data and analyze the business automatically. Credit checks, compliance checks and financial analysis should all happen in the background.

Third, you need an automated closing process. Especially in SBA lending, where compliance is complex, systems should determine what documents are required, ensure all rules are followed and guide the borrower through the process.

When you put those pieces together, you eliminate the manual bottlenecks that make lending slow and expensive.

Scaling What The Best Lenders Already Do

The best lenders today succeed because of their people. They have experienced teams, strong processes and a lot of institutional knowledge.

But that model doesn’t scale. It depends on hiring more experts and putting in more hours.

The next generation of lending will look different. It will take the expertise of the best underwriters and encode it into systems so every lender, even a junior one, can operate at that level.

We’re already seeing this in practice. Banks that specialize in certain industries, like dental practices, develop deep expertise in those verticals. They understand what drives success and risk in those businesses.

Now imagine taking that expertise and embedding it into a system. Suddenly, you can apply that same level of insight across thousands of loans.

That’s how you go from funding hundreds of businesses to funding thousands without increasing headcount.

The Path Forward

Small business lending isn’t broken because it can’t work. It’s broken because we’ve been using outdated processes to solve a modern problem.

The opportunity now is to rebuild it using technology to empower the lenders.

For too long, the focus has been on building competitors to banks. The real opportunity is to build better tools for them.

If we do that, we can make small business lending faster, more efficient and more accessible. We can help community banks compete and win. And we can ensure that the businesses that power our communities continue to grow.

Because when small businesses succeed, everything else follows.​

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