AI use in small-business lending splits opinion on who should make final credit decisions.

After over a decade of AI in small-business lending, the industry is divided on whether AI should make final credit decisions or assist humans. Some lenders like Upstart automate most loans with AI, claiming better risk assessment, while others keep humans responsible for final approval due to accountability concerns. New Federal Reserve data shows more small businesses apply to online lenders but often face higher borrowing costs than traditional banks, raising questions about AI's impact on pricing and access. Regulatory changes in the US and EU are also shaping how AI can be used, with human oversight becoming a legal requirement in Europe. The debate continues as the market awaits clearer evidence from future economic downturns and regulatory outcomes.