When the Banks Get Fast: How AI Is Collapsing Small-Dollar SBA Loan Times

F.I. Editorial Team
9 hours ago
4 min read

A San Francisco fintech now sits behind the country’s top SBA lenders, pushing application-to-funding toward a single week. For an alternative finance industry built on speed, the moat is getting narrower.

For years, the pitch that built the merchant cash advance and revenue-based financing industry was simple: the bank will take three months; we’ll fund you this week. That speed gap was the moat. It justified the pricing, the ISO commissions, and the whole model. So it’s worth asking a question that no longer feels hypothetical: what happens when the banks get fast?

As first reported by American Banker, Casca, the San Francisco fintech formerly known as Cascading AI, is rolling out its AI-native loan origination platform across the largest names in SBA lending, and the early numbers suggest the timeline for a small-dollar SBA loan is collapsing from months toward a single week.

What’s Actually Happening

Casca already sits behind Live Oak Bank and Huntington, by the SBA’s own statistics, the number-one and number-two 7(a) lenders in the country. Now it’s adding Celtic Bank, the $4.8 billion-asset Salt Lake City lender that has ranked among the top ten 7(a) originators since 2013. Casca CEO Lukas Haffer said the firm spent roughly the past year and a half building a design partnership with Live Oak and Huntington before opening the platform to new partners; Celtic is the first.

The platform’s job is unglamorous but consequential: it ingests the paperwork that makes SBA lending slow, the 1919, 413, and 159 forms, financial spreadsheets, document collection, compliance checks, and automates it, pulling from credit bureaus, verification tools, and the bank’s core systems. “We saw small business loans taking 90 days and sometimes longer to close,” Haffer said. “That is what happens when people do things manually.”

The Live Oak Proof Point

The most concrete evidence comes from Live Oak Express, the bank’s two-year-old program for loans up to $350,000, small by SBA standards, and squarely in the size range where alternative funders compete. Live Oak has been co-designing the Casca platform since November 2025 and using it to write Express loans.

The trajectory is steep. Live Oak booked $56 million of Express originations in the first quarter, up from $38 million in the prior quarter, and executives expect to reach at least $750 million in annual Express volume over the next few years. Today, underwriting an Express loan takes about two weeks once documents are in; the bank wants to roughly halve that, moving borrowers from application to funding in seven to ten days.

The economics explain the urgency. Small-dollar SBA loans, Live Oak president BJ Losch told analysts, command a 9% to 13% premium from investors on the secondary market. Run that premium across a multiple of today’s volume, and “the earnings impact is substantial.” Speed here isn’t a customer-experience nicety; it’s the unlock for a high-margin lending line.

Why SBA Loan Times Matter Beyond the Banks

Here’s the part the alternative finance world should sit with. A sub-$350,000 working capital loan funded in seven days or so, carrying an SBA guarantee and bank pricing, competes for exactly the borrower an MCA or RBF funder wants most: the creditworthy operator who took the expensive, fast money because the cheap, slow money wasn’t available in time.

For years that borrower faced a binary choice: wait three months for a bank, or pay up for speed. AI origination is quietly dissolving that binary at the top of the credit box. The very best customers in a funder’s portfolio are the ones most likely to clear an automated SBA underwrite, and they’re the ones a faster bank can now reach before the renewal.

The Case for Calm

It would be a mistake to over-read this. SBA loans and merchant cash advances are not the same instrument, and they don’t serve the same borrower. SBA underwriting still demands credit quality, time in business, personal guarantees, and a documentation burden that a large share of MCA customers simply can’t meet. Automation doesn’t lower the bar. Seven to ten days is dramatically faster than 90, but it still isn’t same-day, and a business that needs cash on Friday isn’t waiting until next week.

There’s also reason for healthy skepticism about the technology itself. Live Oak’s small-business chief, Mike McGinley, was candid that the program is “still in the building phase” and stressed the need to build responsibly while “paying attention to the credit metrics” as volume scales. Automating origination is not the same as automating credit judgment, and no AI-originated SBA book has yet been tested across a full credit cycle. Faster approvals can also mean faster mistakes.

And there’s a concentration wrinkle worth flagging: a single venture-backed platform now underpins the origination flow of the first, second, and a top-ten SBA lender. That’s efficient. It also means a growing share of small-business credit decisions runs through one vendor’s stack, a dependency that risk officers and regulators will eventually want to understand.

The Takeaway

None of this kills the alternative finance model. Demand for fast, flexible, lightly-documented capital isn’t going anywhere, and the borrowers who need it most still mostly won’t qualify for an SBA loan, no matter how quick the underwriting. But the comfortable assumption that SBA loan times and banks are too slow to compete is aging fast. The speed advantage that has justified a lot of pricing in this industry was always partly a function of bad software, and that software is being replaced.

The smart response is attention. Funders who compete purely on turnaround time should assume that the gap narrows every quarter. The ones who build durable advantages, in the borrowers banks won’t touch, in service and relationships ISOs actually value, in products an SBA loan can’t replicate, are the ones who’ll be glad they started now.