Is AI Changing the Small Business Landscape?

Artificial intelligence is increasingly shaping how small businesses operate. From automating routine tasks to improving decision-making, AI is changing how companies work, compete, and generate revenue.

As an SBA Lender, have you considered how technology may affect Borrower performance – and how that might shift your long-term SBA portfolio strategy?

Small businesses have always had to adapt to change. AI is just the latest force reshaping operations, efficiency, and competition. Small businesses that implement AI effectively can become more efficient, reduce costs, and improve customer experience. On the other hand, those who adapt more slowly may face pressure from competitors and changing market expectations.

When your SBA Lending team understands how your Borrowers are navigating these changes, you’ll have a deeper view into risks – and opportunities.

There are two key questions.

1. Do the business’s leaders demonstrate awareness of technological shifts, and do they adapt accordingly?

2. Are the products and services they offer resistant to automation, or do they rely on processes that could be replaced or streamlined with AI?

Borrowers need to understand not only their own use of AI, but also how their customers might be taking advantage of the new technology. Without that insight, they risk being replaced by those customers’ AI use. As a Lender, your understanding into their approach will be key to determining the resilience of a Borrower’s business model.

It’s clear, therefore, that monitoring overall portfolio performance with an eye on technology trends will help Lenders identify emerging risks before they become financial issues. Staying informed about how AI is being used in small businesses should shape underwriting decisions, guide loan structuring, and improve ongoing portfolio management, and support stronger SBA compliance. It can also help Lenders have meaningful conversations with their Borrowers about business planning and technology adoption.

In short, AI is an important factor to understand and incorporate into your assessment of business viability. By thinking proactively, SBA Lenders can ensure their portfolios remain strong and aligned with the realities of the ever-changing business landscape.

Which, after all, is something Lenders have always had to do – it’s just that much more important in this age of AI.

SBA has not yet issued guidance regarding the use of AI through SOP updates or Notices, but we are sure it is on their radar and that the use of AI falls within prudent lending practices. As always, we here at LRM Lender Consultants are keeping an ear to the ground and our eyes open for any recommendations they may make. In the meantime, we’re here to help ensure you remain in SBA compliance, whether through SBA loan reviews, lender consulting, SBA lender training, or support as a lender service provider. Give us a call at 877-576-0819, or contact us through this link. 

We’re ready to help!