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The Evolution of the Commercial Lending Industry Due to Big Data Utility

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There is no doubt that small businesses act as the foundation for the entire U.S. economy, and nearly half of the entire private workforce is made up of small businesses. Despite the large portion of the economy that constitutes these businesses, they have been classically ignored when it comes to commercial lending practices. This is primarily due to the fact that lending systems weren’t modernized until fairly late in the game, and even now there are still issues that could be resolved with the proper tools.

The First Step Toward Modernization

A digital commercial lending infrastructure was created in 1970 by the Fair Credit Reporting Act, which focused on using large amounts of data to promote the advancement of the financial industry. By adding transparency to the process and defining the rights of all consumers, the FCRA sought to balance the system such that all businesses would have equal access to commercial funding.

Once the FCRA was put into action, the regulations that it included allowed for a number of new and helpful financial products to enter the market. It was at this time that the idea of a credit score was introduced, which is nothing more than a measurement of an individual’s …

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