- Key insight: Small Business Administration lenders believe they can leverage automated origination platforms to cut origination times on smaller loans to as little as seven days.
- Forward look: Live Oak Bank originated $56 million of loans through its smaller-dollar SBA program in the first quarter, but executives are projecting that annual small-dollar originations will soon top $750 million.
- Expert quote: “Once that is fully rolled out, it’s going to be so much simpler, easier, faster and more efficient for our people to serve our customers and for our customers to get the capital they need.” — Live Oak President BJ Losch
Artificial intelligence is rapidly changing the way that Small Business Administration lenders originate smaller-dollar loans.
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Cascading AI, which already serves two of the nation’s top SBA 7(a) lenders, says that it’s adding a third top-10 bank to its client list. Under a deal with Celtic Bank in Salt Lake City, the $4.8 billion-asset bank will use the fintech’s AI-powered loan origination platform.
San Francisco-based Cascading AI, which does business as Casca, also serves Live Oak Bancshares in Wilmington, North Carolina, and Columbus, Ohio-based Huntington Bancshares, which are the number-one and number-two SBA 7(a) lenders, according to agency statistics.
“We spent the last one to one-and-one-half years building a design partnership with Live Oak and Huntington,” Casca CEO Lukas Haffer told American Banker. “We decided recently to now go to market and actually onboard new partners, so Celtic is the first.”
“We’re seeing incredible demand,” Haffer added.
The Celtic Bank announcement comes a little more than eight months after Casca
Executives at Live Oak believe they’re on the cusp of scaling the bank’s two-year-old small-dollar lending business, which has started to rely on Casca’s AI loan origination platform.
Live Oak has been “co-designing” the platform with Casca since November 2025, and has been using it to make loans in its Live Oak Express program, according to the bank’s executive vice president for small business, Michael McGinley. Live Oak Express offers loans of up to $350,000, which is on the small side for SBA loans.
The company expects to reach at least $750 million in annual Live Oak Express originations “over the next few years,” McGinley told American Banker.
While piloting Casca’s AI software, Live Oak reported $56 million of Live Oak Express originations in the first quarter, up from $38 million during the three months ending Dec. 31, 2025.
Live Oak hopes to be able to exit the pilot phase and have Live Oak Express fully integrated onto the platform by the end of the year, McGinley said.
It currently takes about two weeks to underwrite a Live Oak Express loan once all documents are uploaded. Leveraging the AI origination platform, Live Oak intends to cut the processing time roughly in half, moving businesses from application to funding within seven to 10 days.
“Being able to create a great customer experience and also have our team be able to underwrite and close loans in a timely fashion requires us to have that next-generation loan origination software,” McGinley said.
“We’re still in the building phase,” he said. “I don’t think we’ve hit the potential we have. … Over the next few years, we want to build the business responsibly. That means paying attention to the credit metrics, understanding what the portfolio is doing as we add more loans.”
Automating the small-dollar origination process is a “huge” development, Live Oak President BJ Losch said Friday on a conference call with analysts. “Once that is fully rolled out, it’s going to be so much simpler, easier, faster and more efficient for our people to serve our customers, and for our customers to get the capital they need.”
Scaling Live Oak Express could significantly expand Live Oak’s profitability. Smaller-dollar SBA loans currently command a 9% to 13% premium from investors. Live Oak has sold about $140 million of its Live Oak Express loans over the past two years.
“If you do the math on [increased origination volumes] with those kinds of premiums, the earnings impact is substantial,” Losch told analysts.
Haffer, Casca’s CEO, said SBA lenders will be able to capture larger shares of the small-dollar business loan market as more of them automate their origination processes.
“We came into this market seeing massive problems,” Haffer said. “We saw small business loans taking 90 days and sometimes longer to close. That is what happens when people do things manually or without data technology.”
