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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesAI-assisted lenders may use a business’s account activity to estimate whether it can repay a loan. That can include summary figures such as deposits, balances and net cash flow, or more detailed records of sales and expenses. Cash-flow analysis may supplement credit-file information; it does not guarantee approval, and the exact data and model vary by lender.
What cash-flow underwriting measures
Cash flow describes money moving into and out of a business over time. A lender may use it to assess repayment capacity: whether the business appears to have funds available to meet loan payments after its expenses. The Federal Reserve describes both high-level account measures and transaction-level business sales and expenditures as possible inputs.
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Potential measures include monthly net cash flow, average deposits or balances, deposit size and regularity, account tenure, overdraft history, changes in average balance, and sales and expenditures. These are examples of signals a model could evaluate, not a standard checklist used by every lender. The Federal Reserve has compared some cash-flow measures with familiar credit dimensions such as payment history and amounts owed; that comparison does not establish that a lender uses a particular score or formula.
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How an AI-assisted review may work
- Account data is provided or accessed. Depending on the lender, an applicant may be asked for bank statements or permission to access account data. The Federal Reserve also identifies digital payment processors as a potential data source. Which accounts, records and time period are included depends on the lender’s request and terms; there is no universal connection method or lookback period.
- The data is summarized or analyzed in detail. A system may evaluate account-level patterns such as deposits and balances, or more granular records of sales and expenses. Data quality matters: incomplete, outdated or inconsistent records may make the business’s finances harder to assess.
- Cash flow is considered as evidence of repayment capacity. Underwriting traditionally evaluates income and expenses. Account activity can provide another view of those flows, sometimes alongside conventional credit information. A simpler measure may be easier to interpret; more complex models can process many data points, but the specific meaning assigned to a signal is lender-specific.
- The lender makes a decision and sets any terms. Cash-flow information may inform approval, denial or loan terms together with other evidence. It is one input to underwriting, not a promise of approval or a substitute for the obligation to repay.
Cash-flow data and traditional credit information
The approaches look at different kinds of evidence and can complement one another. Neither is universally more accurate or fair: results depend on the data, model and circumstances of the applicant.
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| Dimension | Traditional credit-file assessment | Cash-flow assessment |
|---|---|---|
| Typical information | Credit-file history, such as repayment records and amounts owed. | Account summaries, such as deposits, balances and net cash flow, or transaction records such as sales and expenditures. |
| What it can show | Credit repayment history. | Money entering and leaving accounts and changes in account balances. |
| Access considerations | Based on credit information used in underwriting. | May require bank statements or permissioned access to account or payment-processor data; account scope and access terms vary by lender. |
| Interpretation and limits | Credit history is not the same as current business account activity. | Data may be inconsistent or difficult to structure, and model performance in different economic conditions is not established for every use. |
| How it affects a decision | May be one part of the lender’s assessment. | May supplement credit-file information or be considered alongside other evidence; the lender’s model and decision process vary. |
What this approach may help with—and what it cannot establish
Potential advantages
- Account activity may give a lender information about income and expenses that complements a credit file.
- Regulators have described compliant use of alternative data as having the potential to improve decision speed or accuracy and help assess some applicants who may have limited access to mainstream credit. Those are potential benefits, not guaranteed outcomes or measured improvements for business applicants.
- Cash-flow information can be relevant where the lender is evaluating the timing and amount of money moving through a business’s accounts.
Important limitations
- Access can be unreliable, records may be inconsistent or poorly structured, and third-party data can be costly.
- The Federal Reserve notes that many alternative-data models have not been tested through a full business cycle. Their performance during an economic downturn therefore may be uncertain.
- A lender’s use of account data does not mean it sees every account or transaction. The actual scope depends on what the applicant provides or authorizes and the lender’s stated terms.
- There is no established lender-by-lender inventory or business-loan performance estimate in the cited official material. Claims that a named lender uses a particular AI model or achieves a particular approval, default or pricing result require lender-specific evidence.
What to check before sharing business account data
Before uploading statements or authorizing account access, read the lender’s own application and privacy information. Confirm what information is requested and which business accounts or services are in scope; do not assume every transaction will be included or that all lenders request the same history.
- Check whether the lender is asking for statements, permissioned deposit-account data, payment-processor data, or a combination.
- Review the stated period and accounts covered, along with how the lender says the information will be used.
- Check that the records are current and accurately reflect business activity. If a transaction or balance is wrong, ask the relevant bank or data provider how to correct it.
- Ask the lender how to raise a question about inaccurate account information or a decision based on it.
These checks help clarify what information is being considered; they do not predict approval or replace reviewing the loan’s repayment obligations and terms.
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Can a lender deny an application without explaining why?
CFPB guidance says creditors must provide specific reasons that accurately reflect the actual basis for an adverse action, even when they use complex algorithms. There is no special AI exemption. This does not mean an applicant is entitled to the model’s source code or a complete technical description of how it works.
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What regulators’ guidance does—and does not—cover
A December 2019 joint statement by the Federal Reserve, CFPB, FDIC, OCC and NCUA identifies cash-flow data derived from bank account records as alternative data and discusses potential benefits when its use is consistent with applicable consumer-protection law. The agencies also emphasize compliance obligations around alternative-data use.
Separate interagency principles for responsible small-dollar lending identify deposit-account activity as one possible input and include consumer and small-business purposes. Those principles are aimed at supervised banks, savings associations and credit unions offering responsible small-dollar loans; they are not a universal description of every commercial loan or nonbank lender.
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CFPB Regulation B § 1002.107 concerns specified data collection and reporting for covered small-business credit applications. It should not be read to mean every lender is covered or that transaction-level bank records are themselves a required data field. Applicability and current requirements depend on the institution and governing rules.
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