What the data says about small business funding

Who applies, and why

• 60% of firms applied for financing in the 12 months before the survey; 38% applied for a loan, line of credit, or merchant cash advance.
• The most common reasons for seeking financing were to meet operating expenses (56%) and to pursue an expansion or new opportunity (46%).

Read together: more than half of applicants are financing day-to-day operations, which is exactly the use where structure and cost matter most. Matching purpose to structure.

What applicants received

Roughly one in five applicants received nothing. What to do after a decline.

Where they applied

• Among loan and line-of-credit applicants, firms most often sought financing at large banks, followed by online lenders and small banks.
• Small banks fully approved 57% of their applicants, per the report.
• Online-lender usage rose from 17% of applicants in 2020 to 29% in 2025.

Bank vs. online: different tools for different stages.

Financial challenges

77% of firms reported rising costs, tariff-related costs, or both as a financial challenge. Among firms carrying debt, 59% reported a personal guarantee. The report also notes that revenue and employment growth held steady between the 2024 and 2025 surveys while its performance indices remain below pre-pandemic levels.

How to use these numbers

They describe the surveyed population of small employer firms (a convenience sample), not your business, not any provider’s approval rate, and not an individual applicant’s odds. Note the denominators: “applied for financing” (60%) is broader than “applied for a loan, line, or MCA” (38%), and the online-lender figure is among applicants for those three products. They are useful for expectations: many firms are declined or partially funded, operating expenses are the dominant purpose, and online lenders are now a large share of the market. They say nothing about which product is right for you.

Common questions