AI is changing how banks decide on business loan applications

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AI tools have entered banks’ business lending processes, where they are used to assess borrowers, organize financial statements, and draft loan approval memoranda, potentially influencing risk ratings without anyone formally approving them. Outside GC warns that banks must still explain AI reviews, omissions, and human intervention, while federal fair lending laws also require specific reasons for rejecting business applications. The federal banking regulators’ risk model guidance updated in April does not cover AI tools that write text or act autonomously. Banks should document human reviews and override reasons, and limit autonomous actions while maintaining detailed logs.