Financial Institutions Boosted SMB Lending Volume
As defaults rise, lenders are turning to AI and alternative data to maintain approval rates for small businesses.
Updated on Sept. 28, 2026 in Employment
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In a survey of 125 credit professionals conducted in May 2026, 87% of institutions reported increased loan volume for small and midsize businesses. While demand surged, 77% of these lenders also saw delinquency rates climb over the past two years.
Why it matters
Lenders are navigating a dual challenge of high borrower demand and elevated credit risk, forcing a shift in how they assess business health. To manage these tightening margins, firms are moving away from traditional underwriting models toward technology-driven tools.
A survey of 125 credit professionals found 87% of institutions reported increased loan volume, while 77% noted rising delinquencies over the past two years. Additionally, 71% of institutions saw their SMB clients report revenue growth of at least 5%.
The players
LexisNexis
A global provider of information and analytics that released the findings from Atlanta.
The details
Institutions are integrating alternative data at origination, underwriting, and portfolio monitoring to combat risk, with 62% of firms already adopting these practices. Nearly 90% of institutions now deploy analytics, AI, or machine learning to automate decisioning. These tools are designed to filter credit risk amid higher delinquency levels, even as firms plan to increase AI investment by 75% over the next one to two years.
Timeline
The survey of 125 credit professionals was conducted in May 2026.
Reported delinquency and volume increases occurred over the past two years.
Credit approval rates are expected to increase over the next 12 months.
Planned investments in AI and fraud tools are slated for the next 1-2 years.
Market Landscape
This pivot toward automated risk mitigation follows a pattern of heightened caution since the 2023-2024 regional banking liquidity crisis. Firms are now prioritizing deep-data integration to avoid the volatility that previously strained smaller bank balance sheets.
Business owners should expect tighter scrutiny at the point of origination as lenders prioritize alternative data for credit checks. While approval rates are projected to grow, expect lenders to focus heavily on early warning systems for credit deterioration.
The takeaway
The industry is betting that AI can identify credit risks faster than traditional analysts, with 37% of firms currently confident in their early-warning capabilities. Owners should track their own credit health metrics proactively, as lenders increasingly rely on automated data-scraping tools during reviews.
Further reading
For broader trends on labor market and business capital access, visit the Employment section.
Source note: This article includes information reported by CUToday.
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