Half of financial institutions reject micro-business loan applications due to unverifiable legitimacy. Among those with access to third-party data, confidence in credit decisions — and lender profitability — rises sharply. So why do many lenders still rely on incomplete, outdated records that stall approvals and raise risk?

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Smaller firms aren’t necessarily riskier — they’re just harder to score. And without trusted data, too many lending decisions default to “no.”

In “Keeping Score: Why Data Quality Determines Lending Decisions,” a PYMNTS Intelligence and Markaaz collaboration, we surveyed 350 financial institution executives in the U.S. and U.K. to understand what kinds of data banks need to confidently underwrite small to mid-sized businesses (SMBs) — and what’s still missing.

Inside “Keeping Score: Why Data Quality Determines Lending Decisions”:

Nearly 3 in 4 lenders say better credit assessments would improve risk-adjusted returns. Yet only a minority call SMB lending profitable, especially for micro-businesses. The disconnect comes down to data: banks can’t price what they can’t verify.

Fifty-seven percent of institutions cite inaccurate or incomplete records as the top barrier to underwriting small businesses. Others say the data is outdated or unverifiable. These aren’t edge cases — they’re systemwide failures.

Six in 10 U.S. banks want real-time third-party data access. But only about half want full integration of that data into their systems. The gap shows the real priority: speed over infrastructure. Actionable data now beats perfect architecture later.

These findings indicate a clear market signal: Underwriting decisions — and profitability — depend on reliable, timely data from third-party sources.

Download the report to learn how SMB credit underwriting can evolve to meet lender needs and small business demand.

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About the Study

“Keeping Score: Why Data Quality Determines Lending Decisions for the Smallest Firms” is based on a PYMNTS Intelligence survey conducted from March 4 to April 2, 2025. The study analyzes how financial institutions evaluate and underwrite micro and small business creditworthiness. The sample includes 350 executives working in commercial lending, credit underwriting, customer acquisition or compliance at financial institutions in the United States and the United Kingdom. Participating institutions have at least $250 million or £200 million in assets. Respondents provided direct insight into how their firms use third-party and internal data when assessing business loan applications. The data reflects a balanced sample across digital-only banks, credit unions, regional banks and large multinational institutions.