Attending Annual Non-QM Forum 2024? Pre-book your meeting with us today!
Attending Apartmentalize 2024? Pre-book your meeting with us today!
home / Small Business Lending

Small Business Week: Expanding access to capital through AI

2 May 2024
featured Q1 cash flow trends expanding access to capital through ai

National Small Business Week, from April 28 to May 4, 2024, is the perfect opportunity to explore how AI-driven solutions are helping financial service providers expand access to capital for small businesses nationwide.

In a recent report, we partnered with OnDeck Capital to explore small business sentiment and trends in cash flow data. The Q4 2023 report helps better understand how small businesses are faring in today’s unpredictable economic climate. Among the findings, the report showed that while business owners are optimistic, they are also facing challenges related to inflation and increasing payroll expenses.

This challenging economic environment means that, in many cases, efficient access to capital is vital to small businesses’ success.

Technology’s role in expanding access to capital for small businesses

One of the challenges faced by small businesses applying for financing is the limitations of traditional sources of underwriting data in showing a business’ financial health.

While traditional credit bureau data provides a range of insights, it also can fall short of providing a complete picture of an applicant’s finances, especially for borrowers with limited credit histories or those who rely on personal credit to get their business off the ground. This can lead to lenders missing out on good loans and reduced access to credit for financially healthy businesses.

To address this, cash flow data from bank statements, tax forms, and other documents can provide valuable context alongside credit bureau data. This added insight on revenue, expenses, cash cushion, and other loan obligations not only helps expand access to credit for those who may be disqualified using traditional methods but can help lenders reduce risk and make faster, better-informed decisions based on a complete picture of financial health.

Supporting small businesses through more efficient financing

In one example of technology’s role in supporting small businesses, Ocrolus works with Lendr, which provides small businesses throughout the United States with the quick working capital they need. Before working with Ocrolus, the Lendr team spent over 5 hours per week manually verifying bank statements, hindering their ability to understand potential customers’ financial status efficiently.

With Ocrolus AI-driven document automation, the company developed automated qualification and decision engines, empowering underwriters with rapid analytics and a complete view of potential customers before profiles reach their desks.

By integrating with Ocrolus, Lendr decreased bank statement processing time from a multi-hour process to just 12 minutes on average, freeing up their team members for more strategic work rather than manual data entry. The efficiencies gained with Ocrolus also benefit Lendr customers through an expedited funding process that offers faster access to working capital.

This efficiency makes all the difference to small businesses applying for capital because, as Lendr’s VP of Operations & Technology Nick Mates says, “When a business owner’s pizza oven breaks, they can’t afford to wait 30-45 days for a conventional commercial loan — they need funds immediately.”

In small business financing, speed reigns supreme. By leveraging AI-driven solutions and accurate and detailed cash flow data, lenders can make informed decisions, identify trends, and implement strategies that enhance efficiency and contribute significantly to the success of small businesses.

Book your demo to discover how Ocrolus AI-driven document automation can help your organization confidently and efficiently expand access to capital for small business customers.

Key takeaways:
  • In today’s challenging economic environment, efficient access to capital can be vital to small businesses’ success.
  • While traditional credit bureau data provides a range of insights, it must also provide a complete picture of business financial health, especially for borrowers with limited credit histories.
  • Through AI-driven solutions, financial service providers can help improve efficiency and make data-driven decisions to expand access to capital for their small business customers.