Your Banker Wants to See Your Plan for AI
Need a loan? Well, if the bank is going to lend you money, it wants to know your business will be around to pay it back.
Good morning!
Here are today’s highlights:
It might be harder these days to get a job than it is to start a business—at least, that’s what three business owners say on our latest podcast.
The Wall Street Journal editorial board says President Trump shouldn’t be allowed to get away with another tariff bait and switch.
Can AI do a better job picking investments than the VCs who backed AI?
How do small businesses handle HR without HR staff? Join our next 21 Hats Brainstorm.
FINANCE
Your banker wants to know how AI is disrupting your business: “Ray Drew was reviewing a loan application from an online trip-planning business last month and started to worry its service looked uncomfortably close to something an AI chatbot could do in minutes or seconds. He passed on the loan. As the founder of SBA Collective, a network of lenders and advisers focused on Small Business Administration-backed lending, Drew has been having discussions about the impact of artificial intelligence on small business since 2023. But now, the talk is more frequent and much more direct:”
“He’s bringing it up with the borrowers and would-be borrowers of $5 billion-in-assets Winston Salem, N.C.-based Truliant Federal Credit, where he’s managing director of SBA lending. ‘We have to at least ask the question, how is AI disrupting your business? There’s really not a single industry where you don’t need to ask that question,’ says Drew.”
“Sure, most of the impact from AI may not be seen for years. But that’s little comfort to small business lenders who typically make loans with a 10-year life. While the Small Business Administration backstops about 75 percent of a 7(a) loan, banks still absorb losses if a borrower fails and must show the agency they followed proper underwriting standards to collect the guarantee.”
“Bankers analyze cash flow, review collateral, and check a potential borrower’s credit history. The art is the harder part: judging whether the business itself makes sense and has long term survival potential, given the high new business failure rate. (According to the Bureau of Labor Statistics, just under 35 percent of the businesses started in 2013 were still around a decade later.)”
“Normally, the bankers can draw on their own experience; for example, did similar businesses survive the last recession? But every so often something comes along that doesn’t resemble anything they’ve seen before, making forecasting harder than usual: A global pandemic. Tariffs that appear, disappear, and appear again. AI is today’s big known unknown.” READ MORE
THE 21 HATS PODCAST
What’s Harder Now: Getting a Job or Starting a Business? Despite the waves of uncertainty crashing across the economy, this week we hear from three owners who feel cautiously good about how their year has started. David C. Barnett budgeted for slightly less revenue in 2026, but he’s operating more efficiently and expects to turn a bigger profit. Jaci Russo is hitting her revenue projections—and after implementing a profit-first accounting system, she says the results have been “eye-opening.” And while Lena McGuire isn’t quite on track to meet her aggressive goal of doubling her business this year, she’s doing far better than she did a year ago.
Along the way, we talk about getting runaway software subscriptions under control, figuring out how businesses get discovered in an AI world, and why Jaci’s health plan charges almost three times as much to cover female employees as it does comparable male employees. And we consider a question that might have sounded ridiculous not long ago: Has it become harder to get a job than it is to start a business?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
