Lendio & Grasshopper's AI-Powered SBA Lending

Grasshopper Bank has partnered with Lendio, a leading small business financing platform, to power an AI-driven Small Business Administration (SBA) lending experience aimed at streamlining and modernizing the application-to-approval process for small business loans. This collaboration is a key step by Grasshopper to eliminate traditional pain points, like slow manual processes, that have hindered small business owners from accessing timely SBA funding.

Key Points of the Partnership:

• Lendio's Technology: Grasshopper utilizes Lendio's advanced customer acquisition and AI-based decisioning tools. This AI-driven platform helps Grasshopper efficiently source SBA loan packages and automate crucial parts of the underwriting process, such as financial spreading and Debt Service Coverage Ratio (DSCR) calculations.

• Speed and Efficiency: Qualified applicants, through Lendio, can receive personalized, instant SBA loan offers, significantly reducing bottlenecks and funding timelines compared to traditional SBA loan processes.

• Integration: The partnership complements Grasshopper Bank’s broader SBA strategy, with Lendio’s technology being used alongside the bank’s direct and traditional lending channels to provide faster, more flexible access to capital for small businesses.

• Launch and Results: Grasshopper launched its SBA program on Lendio’s platform in April 2025, and closed its first SBA deal through this partnership by May 2025.

Grasshopper Bank, headquartered in New York with approximately $1.4 billion in assets, is positioning itself as a digital-first bank, focusing on sectors such as small businesses, startups, fintech, venture capital, and private equity. Through this alliance with Lendio, the bank aims to lead in tech-enabled lending and maintain a competitive edge in financial services for entrepreneurs.

This move further highlights Grasshopper's ongoing push to digitize and expand its lending operations, with recent efforts also including new executive hires and investments in embedded finance and AI technologies.

How does Grasshopper's AI approach compare to their current underwriting?

Here's a detailed comparison, illuminating how Grasshopper's AI-driven approach, powered by Lendio, stands in stark contrast to traditional underwriting methods:

1. From Manual Bottlenecks to Digital Velocity

Historically, the path to an SBA loan has been notoriously slow, characterized by exhaustive paperwork and lengthy waiting periods, a significant hurdle for businesses needing urgent capital. Grasshopper and Lendio's partnership directly addresses this antiquated model, injecting digital velocity and precision into the process.

• Accelerated Decisioning and Funding Timelines: Where traditional SBA loan underwriting could take weeks or months, Grasshopper's digital application, leveraging Lendio's platform, allows for pre-approvals in less than 10 minutes for qualified borrowers. This rapid initial assessment is crucial for SMBs, who often lack the extensive resources to anticipate capital needs far in advance.

• Streamlined Application Process: The entire SBA 7(a) loan application is now fully digital, significantly reducing friction and paperwork for small business owners. This digital-first approach aligns with modern SMB expectations, as 82% of small businesses already heavily rely on digital channels for account management.

• Automated Top-of-Funnel Efficiency: Lendio's customer acquisition platform serves as a seamless entry point, originating loan applications and engaging directly with small business owners. This automation allows Grasshopper to efficiently source complete SBA loan packages, transforming what was once a labor-intensive initial phase for banks.

2. AI-Powered Accuracy and Bias Mitigation

Traditional underwriting frequently relies on manual data input, subjective criteria, and often, an incomplete understanding of diverse business models. Grasshopper's AI-driven approach seeks to enhance accuracy, reduce human bias, and provide deeper insights.

• AI-Powered Financial Analysis: Lendio's platform utilizes AI for financial spreading and Debt Service Coverage Ratio (DSCR) calculations, which are critical components of underwriting. This automation significantly streamlines these complex calculations, leading to faster and more accurate decisions compared to manual processing.

• Equitable Lending Practices: Grasshopper explicitly commits to using real data, not outdated assumptions, with technology designed to remove human bias from the process. This commitment is vital for reaching underserved communities, ensuring more small business owners receive the funding they deserve, a notable improvement over traditional banks that "struggle to lend fairly and effectively" due to biased criteria.

• Data-Driven Risk Assessment: The intelligent lending platform is built to evaluate applicants across a wide range of attributes gleaned from self-reported data, credit bureau pulls, KYB (Know Your Business) vendors, and bank data aggregators. This contrasts with traditional methods that often struggle with limited and inconsistent data on small businesses, making it difficult to build a rich, reliable lending profile.

3. Enhanced Focus and Digital Leadership

While traditional banks often deprioritize SMB lending due to perceived higher risk and cost inefficiencies, Grasshopper leverages this partnership to reinforce its digital-first mandate and strategic focus on business growth.

• Concentration on High-Value Client Support: By offloading the initial, time-consuming aspects of loan processing to Lendio’s AI-driven platform, Grasshopper’s experienced team can focus on advancing loans that genuinely fuel business growth and deliver high-value support to small business clients. This strategic allocation of human capital is a significant departure from traditional models where staff are bogged down by administrative tasks.

• Reinforcing Digital-First Excellence: As an online-only bank, Grasshopper operates exclusively through digital channels, providing 24/7 access to services. This foundational characteristic allows them to fully integrate and maximize the benefits of Lendio's digital and AI capabilities, avoiding the legacy constraints faced by traditional institutions that are "slower to adopt new technology".

• Complementary SBA Strategy: The Lendio partnership complements Grasshopper’s broader, comprehensive SBA strategy, integrating cutting-edge technology alongside the bank’s traditional and direct lending channels. This layered approach ensures flexibility and expanded distribution, demonstrating how banks can drive efficiency through fintech partnerships while maintaining control over loan decisioning and documentation.

_{Sources: lendio.com, grasshopper.com, merchantmaverick.com}

Podcast Video Interview: Alternative Lending Broker Education with Ion Capital Solutions

Ryan from Ion Capital Solutions, a veteran alternative lender with over 11 years of experience who's changing broker education in the alternative lending space.

What You'll Discover:

• How Ryan built his broker training program after seeing most coaching programs fail students with surface-level education
  
  The real problems plaguing the alternative lending industry: inexperienced brokers submitting poor-quality deals that waste lender resources

• Why traditional broker training focuses on software solutions instead of actual lending knowledge

• How proper broker education reduces merchant complaints and builds trust in the marketplace

• Ryan's take on regulation in the alternative lending space and why it should remain largely unregulated

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