Do Humans Make Small-Business-Loan Decisions, Or Is The Process Automated

by Debi Enders

Do humans make small-business-loan decisions, or is the process automated?

When you apply for a home mortgage or other consumer loan, chances are good that your lender will approve or deny your application using an automated system that evaluates your credit score, credit history and other financial information you provide.

Small-business-loan decisions, however, are different. Most are still made by real live human beings.

There are a couple of reasons for this. First, there is no such thing as a business credit score or business credit bureau that an automated system can use to evaluate your business credit history. That’s one reason why lenders ask for your tax returns—they provide proof of your business income.
Second, many lenders understand that numbers don’t tell your whole story. They want to get to know you. Developing a relationship with a banker can, in fact, often improve your chances of loan approval.

Online lenders are different
Not every small-business-loan application, however, is reviewed by a human. Online lenders, for example, typically base decisions on data alone. These lenders tend to cater to higher-risk borrowers who may believe their chances of approval from a traditional lender are slim. Interest rates tend to be higher as a result.

Traditional small-business bankers who know you are typically better-attuned to your plans and long-term needs. They can help you navigate your options to find the best solution for your situation and steer you away from choices that may not serve you well in the long run.

Automation can be a great time- and money-saver. When you need a small-business loan, however, it still pays to look for the human touch.

Debi Enders (debi.enders@commercebank.com) is
vice president, small business banking at
Commerce Bank.