Lifeline For Micro Businesses: AI And FinTech Simplify SBA Loans, Leading To More Companies Securing Funding

Justin Levy

Source: Benzinga - 06/13/2024

Securing affordable capital is a significant challenge for the smallest of small businesses, often due to the extensive documentation and processing required for U.S. Small Business Administration (SBA) loans. The smallest enterprises typically face hurdles in obtaining funding as lenders often must prioritize larger loans over smaller loans, usually due to staffing or resource constraints, leaving smaller companies underserved.

Artificial intelligence and financial technology are making a meaningful difference in helping micro businesses thrive and grow by simplifying the process for lenders to offer SBA loans, explains Justin Levy, founder and CEO of iBusiness Funding.

iBusiness Funding, an innovator in the lending industry, is transforming small business lending with its flagship offerings, LenderAI and Lending as a Service (LaaS). These solutions revolutionize how banks and lenders operate, making it easier for them to serve small businesses, including those in underserved communities.

LenderAI technology helps lenders streamline and simplify their loan origination processes, reducing the costs associated with loan offerings. This financial technology leverages interpretable and auditable AI to assess the likelihood of SBA loan approval while predicting potential financial distress. All of this allows these lenders to process loan applications more efficiently, ultimately allowing them to lend to more borrowers without sacrificing sound lending decisions.  

Levy notes that the iBusiness Funding team processes over 1,000 small business lending applications daily with its technology. This has led to the provision of more than 130,000 SBA loans, totaling over $7 billion in volume. By using LenderAI internally, the team continually enhances the software, enabling other lenders to achieve similar levels of success in SBA loan processing.

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"One of the big things our LenderAI technology and LaaS do is help lenders offer SBA loans to the smallest of small businesses," says Levy. "SBA-backed loans tend to be the least expensive capital a small business can get, and our technology makes it easier for lenders to provide these crucial loans."

Small business entrepreneurs face unique challenges in securing loans. Many smaller loans, often under $50k, can still require significant documentation and processing, which can be a burden for both borrowers and lenders. With their limited resources, lenders often prioritize larger SBA loans, leaving the smallest businesses underserved.

SBA loan requirements can be a considerable burden for these entrepreneurs, some of whom are sole proprietors without extensive knowledge of financial paperwork. LenderAI helps increase the likelihood of loan approval by providing assistance and guidance on the required documentation, helping small business owners, many of whom are women, minorities, or veterans, navigate the process more efficiently.

"When you create an efficient lending process, you can lower the cost and help the borrowers who need funding the most," Levy notes. "Over 65 percent of all our lending is to woman-, minority-, or veteran-owned businesses."

By digitizing the entire SBA lending process, iBusiness Funding is improving the borrower and lender experience, paving the way for the smallest of small businesses to thrive. "We want to make the market efficient and transparent. Transparency means that people know what product they're getting and exactly what they need to do to qualify for that product."

Ready Capital acquired iBusiness Funding as a subsidiary in 2019. iBusiness Funding's mission is to provide small and medium-sized businesses with efficient and transparent access to capital. It does this through its proprietary loan origination software, LenderAI, which features digital and automated loan processing. Over $7 billion in loans have been processed through iBusiness Funding's platform, including over $300 million in SBA 7(a) loans.

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