Convinced small business lending is on the cusp of a funding boom, CEO Rohit Arora is seeking to position Biz2Credit to handle higher levels of activity. So, 18 years after its start as a platform to match small business borrowers with alternative fintech lenders, the company is prepping the launch of an artificial intelligence-driven underwriting tool.
"Biz2X is going to launch an AI-driven product on our platform very [soon]," Arora told American Banker. "It will help lenders, including ourselves, do a better job of underwriting, and pricing financial services. It can be used by lenders, insurance companies, payroll companies, payments companies, anybody who is touching a small or medium-sized business customer base can now unlock their data to provide high quality financial products and services to these customers."
Behind the New York-based Biz2Credit's tech initiative is Arora's belief the pace of small business lending is poised for liftoff.
As a result, Biz2Credit, which Arora founded with brother Ramit Arora in 2007, intends to spend 2025 introducing AI into its operation. "We'll be able to do a lot of these experiments quickly and run with the ones that actually help businesses and banks the most," Arora said. "We're going to make human underwriters smarter and more productive, as well."
As backbone for its new AI tool, Biz2Credit is utilizing proprietary data collected from the hundreds of thousands of loans, totaling more than $10 billion, the company has helped arrange or has made itself.
Biz2Credit is also seeking to collaborate with other firms — including Mastercard and Visa.
"That makes it even better because there's all of this insight data on how small businesses operate each day that can be used to lift those small business owners' creditworthiness," Arora said. "One of the things we are exploring is how we use [non-personally identifiable information] from these networks to make underwriting even better for businesses and smarter for lenders."
The overarching goal is to give lenders a tool they can use both to increase the speed and improve the quality of their underwriting processes. "Now, with agentic AI, the AI bots can actually start looking at trends, analysis, and put together a lot of the analytics a human underwriter had to do manually," Arora said. "It lowers the cost of underwriting, so that clearly means we can get better outcomes for our borrowers."
"By merging cash flow data with traditional credit data, you're actually able to decision for a small business loan, which is an absolute boon," Mike de Vere, CEO of Zest AI, an AI lending technology provider based in Burbank, California, told American Banker. "Think of community banks, the amount of time and resource they [spend] trying to get these things done, and being able to replace that with a far more accurate, far more inclusive score, that helps them with their decision."
Biz2Credit's move into AI underwriting follows that of other software-as-a-service providers.
Lendio in Lehi, Utah, for example, has reported at least five new banks
"If banks can make a profit growing the economy, and small businesses can prosper in the process, everybody wins," Uplinq cofounder Patrick Reily said in a press release.
There's little doubt AI has captured financial service providers' attention and imagination. A
A similar study conducted by Zest produced an even stronger result. "Eighty percent of financial executives are interested in leveraging AI, specifically for the underwriting process," de Vere said.
"Five years ago, AI was accessible only to bigger financial institutions like Citibank, Truist, Freddie Mac or what have you," de Vere said. Today, Zest's client list includes the $36.8 million-asset Molokai Community Credit Union in Kaunakakai, Hawaii "that does a few hundred applications," de Vere said.
But that enthusiasm is by no means universal, de Vere added. Among bank and credit union executives, significant concerns remain regarding data, cost and — especially — regulation. "The number one barrier that we're finding coming back, 70% of [executives] are saying regulatory fear," de Vere said.
A survey KPMG released last week indicated concerns about data, customer reaction, regulatory scrutiny and costs are keeping some institutions on the fence. Only a quarter of responding banks reported revenue increases linked to AI.
Biz2Credit began lending directly in 2013. In recent years, its efforts have been directed toward growing as a software-as-a-service provider. The company launched Biz2X, a white-label loan management system for banks in 2019. Now it's betting that AI-enhanced underwriting can boost Biz2X's appeal among banks and fast track a more active role in embedded finance.
Biz2Credit is no stranger to embedded finance. It maintains longstanding partnerships with Paychex and CPA.com. Its renewed push comes as a wave of new prospective lenders, flush with capital, is considering playing a more prominent role in small business lending.
"There is a lot of movement happening on the funding side in the private credit space," Arora said. "We're starting to see that small business lending, which used to be done by banks and traditional lenders only, is becoming [more diverse]. Insurance companies, private credit funds, even pension funds are now starting to come in."
The trend promises to fuel the lending boom Biz2Credit and Boston Consulting Group predicted. It could also lead to the creation of a tailor-made customer base for AI underwriting. "These are companies that don't have a physical footprint out there, but they're very comfortable using data," Arora said. "They're very comfortable using digital platforms."
Biz2Credit has already started receiving expressions of interest, according to Arora. "What we're seeing is a lot more businesses are coming to us, not only directly but through our embedded finance network," Arora said. "Whether it's payroll companies, payments companies, insurance companies, everybody wants to offer access to credit and they're saying, 'How can I use that easy embedded-finance type of solution I see in ecommerce, but for my business owner customers.'"
Borrowers, too, are growing increasingly comfortable in a digital environment, Arora said. "Customers are becoming digital-native faster and faster," Arora said. "They want a better outcome. They want a faster outcome, also. Digital finance is how you do that, and business owners know it."
Though business applications dipped in 2024, declining to 5.2 million from the annual record of 5.5 million set in 2023, according to the Census Bureau, monthly totals remain significantly higher than pre-pandemic levels. Arora expects the trend to continue, adding there isn't enough capital at present to meet the startup demand.
"Our mission is to use the power of technology to help close that gap over the next five years."
