PayPal has applied to create an industrial bank in Utah to enhance its small business lending services. Mara McNeill, a veteran in financial services, will lead the new entity, PayPal Bank. This move follows PayPal's recent sale of $7 billion in receivables from its buy now, pay later division.

Mastercard has introduced Credit Intelligence, a suite that uses network data and analytics to speed up credit decisions for lenders, especially for small businesses and borrowers with limited credit histories. The tools allow lenders to access transaction insights with permission, aiming to include more consumers in the lending process.

Small business banking is evolving as fintech companies like Square, Shopify, Ramp, and Brex expand their offerings to include banking services, challenging traditional banks. These companies aim to capture operational deposits and provide comprehensive financial solutions, capitalizing on the lucrative small business market, which is estimated to generate significant annual revenue opportunities.

Small banks are increasingly adopting cash flow underwriting methods to enhance their small business lending capabilities. This approach allows them to better assess the creditworthiness of borrowers by focusing on cash flow rather than traditional metrics, thereby opening up new opportunities for growth in a competitive lending landscape.

The article discusses the intersection of fintech and AI in the context of small business lending, highlighting innovations and trends that are shaping the future of this sector. It emphasizes the importance of staying informed through community engagement and resources.