SMB Lending Expands Even As Delinquencies Rise, LexisNexis Finds
By CU Today Staff —
ATLANTA--Financial institutions are expanding small and midsize business lending even as credit problems increase, with 72% of credit professionals reporting their institutions are actively or moderately growing their SMB lending businesses while 77% said delinquency rates have risen during the past two years, according to a new LexisNexis Risk Solutions report.
The 2026 U.S. SMB Credit Risk Report found 87% of respondents reported increased loan volume or demand during the past two years and 60% reported higher approval rates. Seventy-one percent said SMB revenue grew at least 5%. Looking ahead, 70% expect SMB credit approval rates to increase during the next 12 months, while none expect them to decline.
But lenders are confronting greater risks as they pursue that growth. LexisNexis found rising fraud and identity risk, difficulty monitoring existing SMB portfolios, and assessing applicants with incomplete or thin credit files were the top challenges, each cited by 30% of institutions. Just 37% of respondents said they were very confident in their ability to identify early warning signs of deteriorating SMB credit.
Financial institutions are responding with increased use of alternative data and technology. LexisNexis found 62% use alternative data at origination, 46% in underwriting and 42% in portfolio monitoring and management. Meanwhile, 75% plan to increase AI investment over the next one to two years, 64% plan greater investment in fraud and identity-risk tools, and 54% expect to increase spending on automation or straight-through credit decisioning. Nearly nine in 10 institutions already use analytics, AI or machine learning to some degree, although just 22% use the technology extensively across SMB credit decisioning.
“The conversation around SMB lending is no longer about accessing more data,” said Amy Crawford, senior director of strategy for business risk management at LexisNexis Risk Solutions. “It is about using the right insights at the right time to make better decisions. Our research shows lenders are navigating increasing demand, rising approval rates and higher delinquency levels simultaneously. Pursuing growth opportunities while maintaining disciplined risk management and stronger portfolio performance requires greater visibility into evolving risk.”
The findings are based on a May 2026 national survey of 125 SMB credit assessment professionals at U.S. financial institutions actively involved in SMB lending.
Originally reported by CU Today.