Small business owners rely on community banks and credit unions to be fast, helpful, and understanding of their needs. That’s where SMB lending software and automated tools like AI-powered chatbots come in.
Built into SMB lending software and customer support platforms, chatbots can provide immediate answers to questions and help business owners with loan applications, all while preventing them from having to wait on the phone for their requests.
Many banks have started adopting chatbot solutions because they provide lower overhead, fast response times, and can assist many customers simultaneously. For the loan origination process, automated platforms and chatbots streamline workflows and deliver answers in real-time to customer questions.
For many bank clients, this improves the customer experience. However, many borrowers prefer communicating with a real person, especially when a pressing issue comes up, such as problems repaying a loan or cash flow issues.
The secret is finding the right balance between technology and the human touch so SMBs have the help they need and banks can provide cost-effective solutions.
A blended model where SMB lending software handles routine tasks and your team steps in when needed can deliver the efficiency your bank wants and the trust and confidence customers need when navigating the loan cycle.
We’ll explore current 2025 chatbot trends and best practices for striking that balance in small business lending.
Why More Banks Are Turning to Automated Customer Support for SMB Lending
CoinLaw published several key insights in July 2025 showing that more banks are embracing chatbots in their customer-facing applications. Chatbots processed approximately 3.1 billion banking interactions each month so far in 2025, a 28% increase compared to the year before.
Additionally, 88% of Tier 1 banks based in the United States already have AI chatbot solutions deployed across their platforms and SMB lending software. That's an indicator that both banks and customers are becoming increasingly comfortable with automated services.
Increasing numbers of banks are adopting chatbot lending solutions because they help address an escalating problem: how to support more customers without increasing operational expenses.
As an example, over the past year, chatbots alone have resolved 87% of banking inquiries in under a minute, improving first-contact resolution to 74%, while reducing backlogs by 41%.
The cost for each interaction was also lower with chatbots, dropping from $6 for live support to $0.11 for chatbot-handled questions. Many community banks have smaller staff and tighter budgets, so those numbers really add up.
Lending platforms and SMB lending software can scale loan origination support cost-effectively, while human staff concentrate on underwriting, risk management, and complex cases.
Chatbots also improve customer service for small business owners who look for quick turnarounds so they can run their businesses with as little interruption as possible.
Where Chatbot Technology Falls Short - And Why Human Connection Still Matters
Some customers still prefer human interaction, even as chatbot use grows, especially when it comes to money or trust. On Deloitte's 2025 survey, 37% of respondents said they haven’t used a banking chatbot. Baby Boomers and Gen X are less likely to use chatbots than their younger and digitally savvy counterparts, the survey showed.
Some banks that use chatbots in their SMB lending software also experience integration challenges. Sixty-three percent of financial institutions have problems connecting chatbot platforms to their core banking systems, according to CoinLaw. Meanwhile, 41% of chatbots struggle to gauge intent correctly when asked a non-standard question.
Some users also feel chatbot responses seem scripted. This occurs more frequently when business lending software doesn’t integrate well with core banking systems.
Unfortunately, it can undermine borrower confidence and trust and even result in compliance issues if sensitive data isn’t handled correctly or a bot provides false information, according to the Consumer Financial Protection Bureau (CFPB). Therefore, it’s essential to partner with an experienced and reputable industry vendor to facilitate a better user experience.
Additionally, chat tools often act as “gatekeepers.” Research from Johns Hopkins shows that customers are reluctant to use AI chatbots that don’t clearly explain what they can and can’t handle. This “gatekeeper aversion” can prevent users from engaging, reducing chatbot uptake, even when wait times are short.
Empathy and clarity matter in small business lending, especially during underwriting, cash flow review, or when discussing repayment plans. That’s why human agents must remain accessible until trust is earned, and workflows should include seamless handoffs with full context to preserve conversation flow and borrower experience.
Best Chatbot Practices for Small and Regional Lenders
If your bank is considering expanding its digital capabilities through automation and SMB lending software, it's crucial to understand that chatbot technology should enhance rather than diminish the borrower experience.
Balancing automation and the human touch is vital for delivering fast, efficient service while maintaining the relationship-driven approach that defines community lending.
Here are some tips to consider:
1. Begin with routine tasks and expand gradually.
In the beginning, start with smaller tasks, such as answering general questions about opening a business account or FAQs about the loan origination process and underwriting timelines.
Later, your financial institution can do a bigger rollout that includes other functions, such as loan lead generation and pre-screening, guiding borrowers through the application process, onboarding, small business loan application status checks, and payment assistance.
2. Prioritize transparency and user-friendliness.
An effective chatbot has a user-friendly interface and is fast and responsive. Borrowers should also know when they’re interacting with automation rather than a human. It’s also a good idea to inform borrowers of a chatbot’s limitations. Acknowledge when it’s time for a human to step in.
3. Facilitate real-time handoff to human help, whenever possible.
Chatbots should be designed for a smooth handoff to customer service when the chatbot reaches its limits. Full conversation histories should also be intact to preserve context and support better decision-making.
4. Integrate SMB lending software with core banking systems.
Smooth integration between chatbots and APIs from loan origination systems, underwriting modules, and customer CRM systems is essential so that responses are accurate, timely, and reflective of loan application status.
5. Monitor feedback and track metrics.
Once you’ve launched a chatbot on your SMB lending software, track key KPIs such as bounce rates, retention rates, resolution rates, conversion rates, average time per query, human handover rate, Net Promoter Score (NPS), and common drop-off points.
Also, invite feedback from users about the platform. Use those insights to refine the chatbot’s functionality and determine when to involve human staff for customer experience gains.
6. Provide support during the lending process.
Support from your loan servicing department should always be available. They can assist borrowers with reviewing financial statements or build rapport to increase borrower satisfaction and drive trust. SMB lending software solutions free up time so that your staff is better able to do these things.
7. Build a comprehensive ecosystem.
Embed chat tools within the broader SMB lending platform and lifecycle, from loan origination to servicing. Combined with human support, SMB lending software provides a scalable yet personalized small business lending experience.
Looking Ahead: Future Trends for Chatbot Use in SMB Lending
Cumulative savings from chat-based automation are projected to reach $11 billion between 2025 and 2028. That scale of savings makes it compelling for community banks and credit unions to reinvest in human support for underwriting, risk management, and relationship building.
As technology becomes more sophisticated, chatbot capabilities will increase. Banks are already planning to extend chat-style tools into higher-value SMB lending software workflows. By 2026, CoinLaw states that 82% of financial institutions expect to use chat capabilities for investment advice and insurance.
Emotional intelligence is also on the rise, with 49% of financial institutions piloting emotionally aware tools that can support sensitive conversations like debt management.
As fintech ecosystems grow, SMB lending software will overlap with cash flow tracking and financial advisory services. Chatbots guiding borrowers through integration, onboarding, or repayment workflows will become more powerful.
With improved CRM integration and machine learning, lenders will be able to use real-time signals to personalize decisions without sacrificing efficiency.
FAQs About SMB Lending Software
1. Is it legal for banks to use chatbots in SMB lending platforms?
Chatbot deployment by banks is certainly legal. However, they must comply with federal financial laws, so it’s essential to partner with a reputable and experienced chatbot provider and platform to ensure compliance.
2. What is the guidance from the Consumer Financial Protection Bureau (CFPB) for chatbot use on SMB lending software?
The CFPB strongly suggests that banks understand their legal obligations before deploying advanced technologies, including chatbots.
3. What are some important features for chatbot tools on SMB lending software?
Chatbots on banking platforms should be user-friendly, support natural conversations, be compliant, and be well-trained on your financial institution’s loan processes to provide relevant answers to queries.
4. Will our bank be able to reduce our staff as we automate and implement SMB lending software into our workflows?
Ideally, automation should enable, not replace, human roles. Your staff should shift its roles to focus more on relationship management and borrower support. The adoption of automated workflows should also free up time for staff to address more complex lending scenarios.
5. Can we expand our financial institution’s chatbot capabilities as the technology becomes more advanced?
Chatbot technology is becoming more emotionally intelligent and will soon be able to better comprehend context and user needs and emotions. Personalization will be a key trend, with many chatbots having the capability to offer tailored financial advice.
Download Biz2X’s whitepaper, “The forthcoming revolution in small business lending,” to learn more about future trends in SMB lending.
