Say “Yes” to More Small Business Credit and Loan Applicants

Three Keys to Unlock Customer Portfolio Growth

Commercial lenders and B2B credit officers already understand why small businesses are a big deal – a very big deal. Sizing the opportunity is difficult, but the U.S. market alone is estimated to represent around $1.4 trillion in potential financing. 1

Third-party commercial data can help B2B creditors and business lenders tap into this tremendous market segment, but there is a twist.

Generally, business credit risk assessments require trade credit and commercial payment information. However, many small businesses (such as sole proprietorships, independent contractors, and micro-businesses) can lack detailed business credit and business payment histories. Why?

Very young and very small businesses may not use typical business banking products. Sources such as personal savings, personal credit cards, gifts or loans from family and friends, and even peer-to-peer lending may provide enough cash flow to help them cover their operating expenses and debts. Or they may be able to crowdfund, transact with alternative currencies, or simply barter for necessary goods and services.

Depending on their business strategy, these kinds of sources and activities may serve small business owners well for many years – but are not likely to be visible within traditional commercial credit reporting.

Why Structure Is No Small Matter

According to the U.S. Small Business Administration (SBA) Office of Advocacy, 81% of small businesses have no employees, and many register as sole proprietorships.

When a sole proprietorship is formed, no separate legal entity is created. Therefore, sole proprietors can report their income and expenses within their personal tax returns and pay income and self-employment taxes on their profits. Because sole proprietors are not legally required to establish a separate business bank account for their company, they can manage business payments and transactions via their personal bank accounts.2

As a result, vital information about their business income, payments, and debts stays within their consumer/personal account histories. Because accessing personal account histories can be very difficult for B2B creditors and business lenders, they may be unable to assess the creditworthiness of these small business owners. So they may remain blind to the potential value of these small business relationships and miss opportunities that can strengthen their bottom line.

Overlooking these small businesses because they appear inherently riskier than other potential B2B customers can be a costly mistake. Fortunately, the following keys can help unlock the insights B2B credit managers and business loan managers need to effectively assess and onboard more small business customers.

Key #1: Make It Personal

Sole proprietors and micro business owners who have relied mainly on self-sourced funding will have generated little to no business credit history. So when they do decide to apply for third-party financing, business loan and credit managers will need to consider accessing and combining first-party data, commercial data, and personal/consumer credit information to assemble a more complete picture of creditworthiness. (Creditors and lenders should remember to follow all applicable laws related to the collection and use of data.)

Consumer credit data can help B2B credit managers and business lenders more accurately gauge risks and help predict delinquency for small business customers. But acquiring personal credit data can lengthen the review process and potentially cause friction with applicants for a few reasons.

More Time

First, the process may require working with separate credit bureaus due to their specializations, as most cannot supply both consumer credit and business credit reporting. The additional coordination and communication with multiple bureaus may consume more time and staff than expected, potentially disrupting expected workflows and timelines.

More Permissions

Next, B2B creditors and business lenders are usually required to demonstrate compliance with consumer protection and data privacy regulations before bureaus can grant access to an individual’s personal credit information. Access to consumer credit data is likely to require additional permissions and legal releases directly from applicants, who may have questions or concerns about the implications.

Credit Consequences

Finally, credit and lending managers may be required to secure specific permission to use the small business owner’s Social Security Number. Applicants may not agree to that, especially since the credit inquiry may be considered a “hard inquiry” that can linger on their credit report and possibly impact their personal credit score.

Combined Credit Scores Improve Risk Assessment

Depending on the urgency of small business owners’ needs, delays in decisioning can lead to frustration and abandonment. Asking for personal guarantees and applying strict terms and conditions to a credit or loan offer may also compel applicants to look elsewhere for help.

Using predictive analytics that combine consumer and commercial credit data into a single score would help decisioning and onboarding proceed more smoothly and efficiently – especially when those insights are delivered by one data provider.

The single inquiry approach can help business loan and credit managers more effectively assess potential delinquency. They can tailor terms and offers that are better suited to small business customers, which in turn can help boost acceptance rates, reduce credit risk, drive portfolio growth, and improve profitability. It also creates a better customer experience for small business owners, one that helps avoid concerns about data privacy or credit score changes.

Key #2: Accelerate Reviews and Decisions

Technology can play a pivotal role in the success of B2B credit management and commercial lending strategies, especially as the volume of applications from small businesses continues to grow. But this growth may exacerbate existing issues for finance teams already dealing with multiple systems and platforms, complex workflows, or confusing infrastructure.

With IT resources potentially strained by other organizational needs, credit and lending teams may be better served by “plug and play” tools that can be implemented without lengthy, complex implementations.

Accessing blended commercial and consumer data and analytical insights directly via an application processing interface (API) or purpose-built, AI-driven platform helps teams eliminate tedious manual processes and can help improve the accuracy of credit assessments. By identifying and onboarding the right business customers, commercial lending and B2B credit teams can impact profitability and help protect their organizations from financial risk and losses.

In addition, better data and credit management technology can help automate smarter, faster decisions for small business customers.

In an era of near-instant decisions for consumer credit products, small business owners are likely to expect similar timelines for B2B credit and business loan offers. A protracted review and decisioning process can send the wrong message (“they don’t respect my time or appreciate my needs”) and potentially tarnish a creditor’s or lender’s reputation (“they lack the resources to focus on and keep up with small businesses like mine”).

Shortening wait times for decisions and approvals can help create a more positive customer experience for small business owners. It may also be a powerful first step to earning their trust, winning their loyalty, and building a long-lasting relationship.

Key #3: Optimize Talent and Staffing

The COVID-19 pandemic may be in the rearview mirror, but its impacts on staffing and resourcing, particularly in finance-related functions, have lingered.

Hiring freezes enacted during the COVID crisis resulted in creative workarounds and more “fluidity” in job descriptions and expectations. As a result, many finance professionals still find themselves wearing multiple hats. For example, credit managers may be responsible for managing collections, and accounts receivable managers may be doubling as credit managers.


Though such changes were intended to be short-term solutions, some organizations are making them permanent. B2B media and researchers, as well as finance practitioners themselves, worry that the trend may be creating long-term talent outages that are likely to worsen if inflation continues to outpace average growth rates for compensation. Research from global staffing firm Robert Half indicates 89% of finance and accounting managers are facing challenges in finding skilled professionals to fill roles. That’s left many organizations short-handed.

For finance managers impacted by staffing challenges, incorporating blended commercial and consumer data as well as a purpose-built, AI-driven platform can help mitigate resource constraints. This combination of blended data and a powerful credit management platform can help simplify and streamline vital credit-to-cash processes.

By helping to eliminate tedious manual activities and prevent workflow disruptions, blended commercial and consumer data supports credit and lending teams in working more efficiently with micro and small business customers. As a result, these teams can focus more attention and time on strategic initiatives that can enhance their customer experience, improve decisioning and onboarding, and increase cash flow.

Maximize Opportunities with Micro and Non-Employee Businesses

According to the Small Business Administration, the 32+ million small businesses in the U.S. are the engine for job creation and economic growth for the country, supporting more than 60 million jobs. In addition to creating vital employment opportunities, small businesses can help ignite product and service innovation and help drive investment in their local communities.

Collaborating with small businesses requires an awareness of their unique needs. For B2B creditors and business lenders, that means building a deeper understanding of the strains and circumstances under which small business owners operate.

A high interest-rate environment can exponentially add to owners’ stress, as daily expenses may increase while cash reserves may necessarily shrink.

A recent report issued by the Federal Reserve Banks underscored this concern. Increasingly, small businesses want help so they can meet operating expenses rather than fuel business expansion — a major change from what firms reported before the pandemic. During the two years analyzed within the report, potential borrowers seeking funds for operating expenses grew from 43% to 62%, while those asking for funding to expand their business dropped from 56% to 41%. 3

Gain a New Perspective on Small Businesses

It seems clear that small business owners need help now. It’s time for B2B credit managers and commercial lenders to look beyond traditional approaches for evaluating creditworthiness of micro and small businesses, so they can offer the right products and the right terms promptly and efficiently.

Using blended commercial and consumer credit data insights to guide timely decisions and onboarding can help B2B credit managers and commercial lenders cement relationships with small business owners and improve customer retention rates. Building a healthier and more diverse credit or lending customer portfolio may also contribute to more consistent cash flow and a better bottom line.

How can commercial lenders and B2B credit officers enhance small business customer experience, add insight into small business delinquency risk, and improve credit-to-cash processes? Start by learning more about powerful credit management and risk management solutions from Dun & Bradstreet -- D&B Blended Scores and D&B Finance Analytics Credit Intelligence.

  1. “Key Dimensions of the Small Business Lending Landscape,” Consumer Financial Protection Bureau, May 2017
  2. “Sole Proprietorship: What It Is, Pros & Cons, Examples, Differences From an LLC,” Investopedia, May 2023
  3. “Small Business Credit Survey: 2022 Report on Employer Firms,” U.S. Federal Reserve Banks, May 2022

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