Survey finds small-business lending fraud on rise

Lending fraud with small and midsize businesses has increased significantly over the last 12 months, and many financial institutions expect it to get worse, according to a new survey by LexisNexis Risk Solutions. The survey of lenders found the average year-on-year increase in SMB lending fraud was 14.5%, compared to 6.9% in 2021. Nearly three in four respondents expect the problem to get worse over the coming year.

SMB lending fraud losses likely represented as much as 15% of overall losses for the institutions surveyed. The average value of SMB lending fraud losses as a percentage of annual revenue was down slightly at 5.5% compared to 6.2% in 2021, although it remained higher than pre-pandemic levels. The survey noted that SMBs submit more than half of lending applications through online or mobile channels, with a similar proportion of fraud losses attributed to those channels. Still, banks and credit unions reported a small uptick of in-person loan applications and fraud losses as most banks resumed normal in-person operations following the pandemic.