The missing ingredient in the SBA's strategy: A Fintech Partnership Plan

Jay Long is cofounder and COO of Parlay Finance, a SaaS-based Loan Intelligence System (LIS) that helps lenders efficiently issue SBA and small business loans. Their AI-powered platform streamlines digital onboarding, verification, and qualification while integrating with Loan Origination Systems to boost volume and profitability. Parlay recently partnered with Mastercard and JAM FINTOP to expand its services nationwide. For more information, visit www.parlay.finance.

Phil Goldfeder is the CEO of the American Fintech Council, the premier trade association representing the largest financial technology (Fintech) companies and innovative banks. Our mission is to promote a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. AFC members foster competition in consumer finance and pioneer products to better serve underserved consumer segments and geographies. For more information, visit https://www.fintechcouncil.org/

America's manufacturing renaissance depends on a simple truth: government strategy and private capital must work in lockstep. Capital markets and policymakers are now waking up to this reality. This recognition spawned initiatives like the Pentagon’s Office of Strategic Capital, which provides loan guarantees for lenders supporting critical technology sectors. More recently, Congressional leaders advanced the Made in America Manufacturing Finance Act to strengthen the Small Business Administration’s (SBA) impact on domestic industrial capacity.

Success hinges on balancing rapid capital deployment with strong credit risk management. Yet striking this balance remains elusive. The CHIPS and Science Act authorized $280 billion to reshore US semiconductor manufacturing, but faced lengthy delays in deploying capital. In contrast, the Economic Industry Disaster Loan Program effectively deployed capital at speed, but was dogged by concerns of fraudulent applications. 

The SBA must embrace both speed and rigorous risk mitigation to fulfill Secretary Loeffler’s vision of becoming “an America First engine for free enterprise.” Achieving this requires modernizing the agency’s own operations while equipping its network of community lending partners with modern technology infrastructure and data-driven insights to amplify the impact of the SBA’s lending programs. 

Government programs designed to accelerate economic development work best when policy aligns with rapid capital deployment. Small Business Innovation Research (SBIR) grants and Department of Defense initiatives like AFWERX have proven this by accelerating American innovation. But, America’s industrial base runs on debt, not equity. For every venture-backed startup, hundreds of small manufacturers depend on community bank loans to scale operations and secure supply chains. The technologies powering community lending are therefore critical infrastructure for America’s manufacturing resurgence.

Unfortunately, many community lenders operate on systems that cannot keep pace with modern capital demands, creating bottlenecks precisely where America needs manufacturing capacity most. To secure supply chains and restore American competitiveness, SBA needs a financing model that delivers speed, rigor, and reach. That means embracing the fintech tools and partnerships that can scale SBA efforts without sacrificing prudence.

The Small Business Capital Crisis

Since 1995, small businesses have generated over 60% of net new jobs in the U.S., fueling innovation and resilience from rural towns to urban centers. Yet today, these economic anchors face a capital access crisis. Nearly 80% of small business owners struggled to secure financing last year, a crisis worsened by inflation and rising tariffs that leave nearly two thirds of small businesses uncertain about their economic future. Without timely access to capital, these businesses risk faltering, which could undermine the broader economy and threaten our already vulnerable supply chains.

This capital crunch hits hardest where it matters most: the manufacturers powering America’s critical supply chains. For every headline-grabbing CHIPS Act investment in semiconductor giants, thousands of smaller suppliers quietly power our industrial base by producing sub-assemblies, precision parts, and specialized machinery that larger firms depend on. Their ability to access timely capital directly affects whether America can meet the demands of reshoring and compete globally. The solution lies in modernizing how we deploy capital.

The Infrastructure Gap

The SBA oversees critical programs that support small businesses, yet much of its infrastructure struggles to keep pace with current capital demands. Recognizing these limitations, the SBA has taken important steps to modernize its capabilities. However, many of its application processes remain time-consuming, and lenders still rely on fragmented, manual systems. These delays are frustrating and strategically unsustainable. With reshoring efforts ramping up, capital needs increasing, and government efficiency mandates tightening, the SBA must dramatically expand its capacity without expanding bureaucracy or compromising risk standards.

Fintech partnerships provide the fastest path forward. Responsible AI-enabled tools and automated workflows can significantly reduce processing times, enhance document verification, and support faster disbursement of funds without compromising underwriting standards. These solutions won’t replace human judgment, but they can help the SBA expand its capacity without bloating bureaucracy or risking oversight lapses.

Most critically, modern technology could create America’s first comprehensive small business data asset. Today, policymakers rely on fragmented, incomplete data sets riddled with survivorship bias that track only successful applicants while ignoring those who drop out. Fintech providers can help unlock “dark data,” turning PDFs and paper files into digital intelligence, powering an early-warning system that identifies vulnerabilities before they become economic crises.

This dataset could enable a missing feedback loop that would effectively support the SBA’s desire to return to stricter underwriting standards while also flagging early warning signs to reduce defaults and delinquencies. These insights would also allow the SBA to serve as a proactive economic strategist, precisely deploying resources where America’s industrial base needs them most.

From "No" to "Not Yet"

This data advantage would transform how we serve rejected applicants. For too many small businesses, a loan rejection is the end of the road. But it doesn’t have to be. With the right technology, the SBA can shift from binary decision-making to a more personalized, feedback-driven model that can empower applicants to understand why they didn’t qualify and what they can do to improve. Today, only about 1 in 5 small business loan applicants are approved. This 80% rejection rate represents untapped potential that SBA can convert into future lending successes with the right Fintech partnerships. Fintech partnerships could change that. With automated feedback and data-informed eligibility scoring, denied applicants could receive clear next steps, coaching, and resources. This would complement existing programs like Lender Match and SCORE, while reducing future delinquencies and improving borrower readiness.

This approach is especially critical for entrepreneurs from underserved communities, who often face structural barriers to capital. By combining fintech insights with trusted SBA programs like SCORE mentors and Small Business Development Centers, the agency could better serve all communities, not just those with existing access to traditional financial institutions.

A Call for Coordinated Action

The SBA stands uniquely positioned to bridge public policy, private capital, and community resilience. To meet the demands of this moment, it must move beyond legacy models and embrace a more strategic, tech-enabled approach to capital deployment. That shift starts with bold, coordinated action anchored in five key priorities:

1. Support the Made in America Manufacturing Finance Act to raise the SBA 7(a) loan cap.
   The current $5 million cap hasn’t kept pace with inflation or the capital needs of modern manufacturers. Adjusting this limit would unlock growth for applicants with higher capital needs, supporting the America First agenda.
   

2. Launch a national fintech partnership strategy.
   Fintech partnerships aren’t optional, they are essential enablers for the SBA to achieve its core mission at scale. By partnering with responsible providers that meet strong standards for compliance and transparency, the SBA can scale smarter, faster, and more equitably.

3. Deploy AI-powered eligibility and readiness tools.
   Small businesses nationwide would benefit from immediate feedback and insights that help them understand their eligibility for SBA 7(a) loans and navigate the path towards building more bankable businesses. Fintech platforms that leverage AI technology, industry specific data, and firm specific data calls offer an efficient, scalable capability that the SBA could harness to help more small businesses compete and win.  

4. Launch a community bank technology grant program.
   Targeted grants would help small lenders modernize operations, partner with fintechs, and enhance underwriting while preserving rigorous credit standards.
   

5. Create unified data standards for small business lending.
   Standardized, anonymized data collection would give policymakers real-time insights into small business health, enabling smarter, faster responses to emerging risks.

Decisive action today will transform American small business financing into a strategic national advantage. With the right network of fintech partnerships and a modern infrastructure, the SBA can fulfill Secretary Loeffler's vision of deploying capital efficiently while maintaining the highest risk and underwriting standards, and the SBA can provide access to capital to the communities that need it most, efficiently and responsibly.

The opinions shared in this article are the author’s own and do not reflect the views of any organization they are affiliated with.

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