How Community Banks Can Win the Small Business Lending Race

Ask a small business owner what keeps them up at night, and the answer is the same: access to capital. It is the number one problem they cite in survey after survey. Yet, when seeking a loan, most small business owners face two equally frustrating choices.

The first option is a bank. Choose the right institution and you will get the best terms, the lowest rates, the longest amortization and the backing of a Small Business Administration guarantee. The downside is that closing can take 90 days. For a business owner trying to fund an inventory purchase or close an acquisition, that delay can mean losing the opportunity altogether.

The second option is the wave of online lenders that promise money in 15 minutes. They deliver the speed and convenience that small business owners need, but often at a steep price, with annual percentage rates (APRs) of 45%, sometimes north of 100%.

Community banks should take confidence in one important fact. They already have the better product. They offer lower rates, better terms and a genuine mission to serve their communities. What they have lacked is the technology to deliver those advantages at the speed borrowers now expect. That gap — not the rates or relationships — has quietly shifted market share to predatory lenders. Today, this is a gap banks can close.

JPMorgan Chase & Co. has made small business banking a strategic priority, expanding its branch network into new markets, placing dedicated business bankers in those branches and investing heavily in digital tools that make borrowing easier. When the biggest institution in the world decides a segment is worth that kind of capital, it is telling every other lender something important: this is a race, and it has already started.

Community banks do not need to outspend JPMorgan to compete. For the first time, technology that was once available only to the country’s largest banks is within reach for institutions of any size. Artificial intelligence-native loan origination gives a $500 million community bank many of the same operational advantages that previously required the engineering resources of a $4 trillion institution.

That transformation begins before underwriting ever starts. Many banks still lack an “apply now” button. Instead, borrowers find a contact form or a list of loan officers’ email addresses. That friction alone causes roughly 90% of would-be applicants to churn before they ever start. Replacing that experience with a streamlined online application and self-guided applicant portal can push conversion above 80%.

Most delays happen after an application is submitted. An SBA loan rarely takes 90 days because of underwriting itself. Instead, weeks are spent exchanging emails, collecting tax returns, bank statements and signed forms, often with two- and three-day gaps between every interaction.

At Casca, we’ve noticed that 63% of applicant activity happens outside banking hours. The busiest moment is Friday night at 10:30, when many borrowers have time to move their application forward. Banks need to meet them where they are. AI can draft the personalized follow-up that once took a banker 20 to 25 minutes in about a minute, while accounting for documents already received, what’s still outstanding and the logical next step.

The same transformation is happening in underwriting. Many underwriters still spend days rekeying numbers from PDFs into spreadsheets. Modern language models can analyze thousands of pages, including tax returns, management-prepared financials and even handwritten rent rolls, in minutes. The key is implementing AI with the right safeguards. Every number should be tied back to its original source, making the process fully auditable and explainable while giving the underwriter the ability to review and override every recommendation. The latest versions of AI are probabilistic, not deterministic. The most effective implementations keep humans firmly in control, using AI to accelerate judgment rather than replace it.

None of this replaces what community banks do best. It allows them to do it faster. Relationships, local knowledge and a willingness to understand a business remain advantages that online lenders cannot replicate. Technology simply removes the operational friction that has prevented banks from delivering those strengths at the speed today’s borrowers expect.

The tools already exist, and they are no longer reserved for the largest institutions. Community banks that embrace them can deliver more capital to the small businesses that drive their local economies while strengthening valuable customer relationships. Those that wait risk watching both the loans and the relationships go elsewhere.