AI Is Changing Lending, But Trust Remains The Real Advantage
AI Is Changing Lending, But Trust Remains The Real Advantage
Publish Date: 2026-07-12 07:30:00
Source Domain: www.forbes.com
CHINA – 2025/06/14: In this photo illustration, the back of a $50 bill is seen displayed featuring the U.S. Capitol building and “IN GOD WE TRUST” wording with other bills in the background. (Photo Illustration by Sheldon Cooper/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
Artificial intelligence is transforming nearly every corner of financial services, but perhaps nowhere is its impact more immediate than in small business lending. Companies including Merchant Bloom, Velocity Capital Group, NewCo Capital Group and Forward Financing are using automation, predictive analytics and AI-powered underwriting to deliver funding decisions in hours rather than weeks. For entrepreneurs who have long struggled with the slow pace and rigid requirements of traditional bank lending, that speed represents meaningful progress.
Yet while technology is reshaping how financing is delivered, it is also forcing the alternative lending industry to confront a more fundamental question: What happens after funding? As artificial intelligence becomes widely available, speed alone is no longer enough to differentiate one lender from another. Increasingly, the firms that will define the industry’s next chapter are those earning something technology cannot automate, trust.
Alternative lending emerged because millions of small businesses were underserved by conventional financial institutions. Restaurants, contractors, retailers and service businesses often need working capital quickly to seize opportunities, manage seasonal cash flow or navigate unexpected disruptions. Traditional banks, constrained by stricter underwriting standards and lengthy approval processes, frequently cannot meet those needs.
Merchant cash advances and other forms of revenue-based financing stepped into that gap, providing entrepreneurs with faster access to capital. But rapid growth also came with growing pains. The industry has often been criticized for aggressive sales practices,…
