Small Business Cash Flow Trend Report
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About the Trend Report
Through an ongoing partnership, OnDeck and Ocrolus have released the 11th Small Business Cash Flow Trend Report. OnDeck, part of Enova, is a market leader in small business lending and Ocrolus is a document AI and cash flow analytics platform for lenders. The report is based on two inputs:
- Quarterly customer survey responses from 805 small businesses with working capital loans from OnDeck across all regions. These businesses generally have fewer than 30 employees and less than $10M in revenues.
- Quarterly cash flow data based on median monthly metrics from over 3.76 million applications for working capital financing over a 15-month period.
The Q2 2026 report offers fresh insights into the state of small businesses and highlights trends observed over the past year.
Q2 2026 Key Findings
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Point 1
Growth Expectations. Small business optimism held firm in Q2 2026, with 93% of owners expecting moderate to significant growth over the next year, consistent with Q1 2026.
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Point 2
Top Challenges. Inflation reclaimed the top spot as the leading small business concern (34%), surpassing cash flow (30%).
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Point 3
Lender Preference. Seventy-five percent of small businesses report bypassing traditional banks in Q2, in line with prior quarters.
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Point 4
AI Adoption. Sixty-one percent of small businesses report using AI, up from 58% in Q1, with 91% of users reporting a positive impact on business performance.
Growth Expectations
Small businesses remain confident in Q2 2026, with 93% of respondents anticipating moderate to significant growth over the next year. This confidence is grounded in results, as 70% of business owners report their 2026 business performance is on track or ahead of plan — up from 68% in Q1.
Future Growth Expectations
| Quarter | Significant Growth | Moderate Growth | No Growth |
|---|---|---|---|
| Q2 2025 | 26.1% | 65.4% | 8.5% |
| Q3 2025 | 30.5% | 62.2% | 7.3% |
| Q4 2025 | 29.1% | 64.5% | 6.4% |
| Q1 2026 | 32.0% | 61.4% | 6.6% |
| Q2 2026 | 30.4% | 62.9% | 6.7% |
This optimism has held steady for several quarters, and has improved year over year with 30% expecting significant growth (compared to 26% in Q2 2025). Healthcare & Social Assistance reports the highest significant growth expectations across industries in Q2 2026 (34%) and the highest share planning to hire in the next six months (42%), followed by Construction (33% growth, 39% hiring) and Professional & Technical Services (31% growth, 34% hiring). This growth optimism is showing up in hiring plans across industries, with more than one third of businesses reporting plans to add staff in the next six months. The Q2 2026 U.S. Chamber of Commerce Small Business Index shows a similar hiring sentiment, with 35% of owners expecting to increase staff over the next year — up from 30% in the previous quarter.
This is reinforced by similar findings from the June 2026 NFIB Small Business Economic Trends Report, where the optimism index increased 1.6 points compared to March. Improved expectations for business conditions and sales drove the increase, which remains just shy of its historical 52-year average (98.0).
35% of businesses plan to increase headcount in the next six months.
More than 42% of respondents in Healthcare and Social Assistance plan to increase headcount in the next six months.
Top Challenges
Small businesses surveyed have consistently identified inflation and cash flow as their top challenges over the last two years. Inflation concerns peaked in Q2 2024 (44%) before gradually easing to 29% in Q1 of this year, when cash flow surpassed it as the top concern — a survey first. In Q2, inflation returned to the top position at 34%, with cash flow at 30%. This is consistent with the U.S. Chamber’s Q2 Small Business Index, which found inflation remained the dominant concern among small business owners, cited by 57%, up from 48% in Q2 2025. The NFIB Index findings also showed that inflation ranked as the top business problem, consistent with the Q2 OnDeck survey results.
Inflation (34%) and Cash flow (30%) remain the dominant concerns.
At the industry level, inflation has shifted from a broad-based focus across sectors to one increasingly concentrated in a smaller number of industries facing distinct cost pressures. Transportation and Warehousing reported the highest inflation concern of any industry in any quarter across the report's history, with 54% of owners citing it as their top challenge this quarter. Accommodation and Food Services has cited inflation as its top concern every single quarter since the inaugural report, now at 47%. For every other tracked industry, cash flow has either emerged as the dominant concern or the two are running near parity — a shift from 2024, when inflation led across nearly all sectors.
The top reasons small business owners reported seeking capital in Q2 were to increase cash flow (38%), cover normal business expenses (34%) and support business expansion (33%). These needs are consistent with previous quarters and show industry-specific patterns. The Retail sector has cited inventory as their top reason each quarter — 59% in Q2 vs 17% across industries. Construction consistently cites covering delayed payments from customers as their top reason (42% in Q2). Forty percent of Healthcare owners report needing capital for business expansion purposes in Q2, paired with the highest intent to hire (42%) and among the highest growth expectations (96%).
Small businesses continue to rely on a dependable set of strategies to manage cash flow. For the eighth consecutive quarter, the top three approaches among respondents include using a business line of credit (57%), delaying payment to themselves or family (49%) and making the minimum payment on credit cards (41%). This steady use of short-term liquidity tactics reflects the gap that growing businesses face when operating expenses and investments outpace available cash. Ocrolus cash flow data points to continued growth activity, with small businesses maintaining a revenue-to-expense ratio of 100% overall in Q2 2026, suggesting that available capital is being actively deployed back into the business and underscoring the ongoing role of flexible working capital in supporting expansion.
Median Monthly Revenue-to-Expense Ratio by Quarter
| Quarter | Accommodation & Food Services | Construction | Manufacturing | Professional, Scientific, & Technical Services | Retail Trade | Transportation & Warehousing | Wholesale Trade | All Industries |
|---|---|---|---|---|---|---|---|---|
| Q2 2025 | 100.60% | 101.94% | 100.87% | 101.48% | 101.16% | 101.82% | 100.62% | 100.98% |
| Q3 2025 | 100.42% | 101.80% | 100.81% | 100.24% | 100.97% | 101.80% | 100.74% | 100.83% |
| Q4 2025 | 99.79% | 101.22% | 100.62% | 100.00% | 100.87% | 101.69% | 100.77% | 100.47% |
| Q1 2026 | 99.65% | 100.11% | 100.44% | 99.81% | 100.63% | 101.64% | 100.49% | 99.84% |
| Q2 2026 | 100.86% | 101.36% | 101.26% | 101.27% | 100.70% | 101.71% | 100.78% | 100.30% |
As shown above, Ocrolus cash flow data points to a strengthening in revenue-to-expense ratios across all industries. Every tracked industry improved from Q1 2026, with Construction, Manufacturing, Professional, Scientific & Technical Services, and Transportation & Warehousing operating above a 101% ratio. Construction and Transportation & Warehousing show the most consistent operating performance, maintaining this ratio across the 15-month period. Manufacturing is the only industry that has not dipped below 100% in any single month over that same period.
Lender Preference
Small businesses continue to rely on non-bank lenders for access to capital, with 75% of respondents reporting that they bypassed traditional banks in Q2 when seeking additional working capital — consistent with findings over the past two years and near the survey’s all-time high of 76% in Q1. The top reasons cited for bypassing a traditional bank include: too much paperwork (46%), not thinking they’d qualify (28%) and lack of clarity around the application process (23%). Of the 25% that applied for a traditional bank loan first, nearly half (48%) were denied. An explanation for this may be found in the April 2026 Senior Loan Officer Opinion Survey on Bank Lending Practices. The survey reported that banks tightened standards on commercial and industrial (C&I) loans to firms of all sizes, with some banks also reporting higher premiums on riskier loans and tighter collateral requirements. The surveyed banks also reported demand was basically unchanged.
Median Monthly Debt Inflow Volumes of Applications by Quarter
| Quarter | Non-bank Debt Inflow | Bank Debt Inflow |
|---|---|---|
| Q2 2025 | $8,046 | $7,431 |
| Q3 2025 | $8,151 | $7,539 |
| Q4 2025 | $8,641 | $6,747 |
| Q1 2026 | $8,824 | $6,929 |
| Q2 2026 | $8,885 | $6,887 |
Ocrolus cash flow data shows median monthly fintech loan inflows up 2% quarter over quarter and 11% year over year. Traditional bank loan inflows fell 1% quarter over quarter and 6% year over year. Cash flow data shows non-bank loan inflows up 11-13% year over year in large and small metro markets, while traditional bank loan inflows declined — particularly in small metro markets (down 19% year over year). Working capital challenges are most evident in rural markets, which saw traditional bank loan inflows down 26% year over year while non-bank inflows remained steady.
AI Adoption
Small business AI adoption continued to climb in Q2 2026, with 61% of respondents reporting active use, up from 58% in Q1. Ninety-one percent of AI users report a positive impact on their business, up from 89% last quarter. Consistent with previous quarters, the highest measurable benefits ranked by those using AI were: reduction in errors or rework (40%), improved employee productivity (38%) and improved marketing performance (34%). This aligns with recently published research on AI use among small businesses from the U.S. Chamber of Commerce Foundation, in which 65% of employers say employees are using the extra time to produce more or higher-quality work.
AI use among small businesses: 61% of small businesses report using AI — up from 50% one year ago.
Claude gaining market share: Anthropic’s leading AI tool more than doubled its usage among respondents quarter over quarter
Adoption varies significantly by industry and business tenure. Professional and Technical Services (75%) and Healthcare and Social Assistance (69%) report the highest penetration, while Construction (42%) and Transportation and Warehousing (47%) report the lowest AI usage. Newer businesses are also more likely to have adopted AI: companies in operation one to five years report 71% usage, compared to 45% among businesses in operation 21 years or more.
Among specific tools used to search for information, ChatGPT remains the most widely used at 81%, though its share has declined from 90% in Q1. Google Gemini held roughly steady at 36%, up slightly from 33% last quarter. The most notable shift was Claude, which more than doubled its usage among respondents from 16% in Q1 to 33% in Q2, moving ahead of Microsoft Copilot (17%) into third place among AI tools used.
Methodology
OnDeck analyzed survey responses from 805 current customers, who completed the survey June 16-24, 2026. Please note: We have not verified this data or survey responses. It may contain errors or inaccuracies, and we make no representations or warranties as to its reliability, accuracy or applicability. Customers received an incentive for completing the survey.
Purpose
The data is designed to reflect the cash flow, financial health and liquidity of small businesses in the United States. Through tracking the unique combination of data available to Ocrolus and OnDeck, it will be possible to understand the trends affecting small businesses, the economic environment in which they operate and their access to capital.
Data
Ocrolus receives data on hundreds of thousands of small businesses each month as part of applications for credit. The data consists of transactional bank data in the form of bank statements or digital bank data feeds, generally comprising the most recent 3 – 6 months prior to the time of application. Ocrolus then uses its proprietary transaction tagging and analytical capabilities to generate a detailed set of cash flow attributes for each business, thereby facilitating a lender’s understanding of its financial health and ability to service additional debt. The report is comprised of small business loan application data from the previous 15 months. Previous period figures often change slightly as new loan applications provide retrospective data.
Filtering/Exclusions
The data is filtered to include only applicants within the 50 U.S. states. Applicant data with partial bank accounts was filtered out for the latest report as the partial data was skewing values lower, particularly for the most recent months.
Calculations
For each small business, for each calendar month, Ocrolus calculates revenue, credits, debits, expense, payroll, non-sufficient-funds transactions, proceeds from lenders, payments to lenders and the use of alternative payment methods. The full data set can be viewed for each respective report via the downloadable results.
Q1 2026 Key Findings
-
Point 1
Growth Expectations. Small businesses remain confident, with 93% expecting growth in the next year and 32% expecting significant growth — a survey all-time high.
-
Point 2
Top Challenges. Cash flow emerged as the top concern for small business owners (31%) for the first time, surpassing inflation (29%).
-
Point 3
Lender Preference. Over 76% of small businesses report bypassing traditional banks for capital, a survey all-time high.
-
Point 4
2026 Planning Strategies. Access to credit was the leading factor shaping small business strategy (46%), followed by consumer spending (42%) and interest rates (35%), while external macro risks such as trade policy (14%) ranked lower in Q1 — consistent with previous quarters.
-
Point 5
AI Adoption. Fifty-eight percent of small businesses report using AI, continuing the steady upward trend seen in 2025, with 89% of users reporting a positive impact on their business.
Growth Expectations
Small business confidence remains strong in Q1 2026, with 93% of owners anticipating moderate to significant growth over the next year. The percentage of businesses expecting significant growth rose to 32% — a survey all-time high.
Future Growth Expectations
| Quarter | Significant Growth | Moderate Growth | No Growth |
|---|---|---|---|
| Q1 2025 | 29.1% | 64.5% | 6.4% |
| Q2 2025 | 26.1% | 65.4% | 8.5% |
| Q3 2025 | 30.5% | 62.2% | 7.3% |
| Q4 2025 | 29.1% | 64.5% | 6.4% |
| Q1 2026 | 32.0% | 61.4% | 6.6% |
Overall optimism remains broad-based across industries, with the highest significant growth expectations reported by Professional and Technical Services (37%) and Retail (33%). This is supported by underlying performance trends seen in Ocrolus cash flow data, including year-over-year revenue growth in Professional and Technical Services (+8%), alongside stable revenue in Retail.
This optimism persists amid a rapidly evolving macro environment. The March 2026 NFIB Small Business Optimism Index eased to 95.8, dipping below the 98-point historical average, even as sector-specific performance remains resilient. A similar pattern was observed in the March 2025 Index, when optimism fell 3.3 points month-over-month to 97.4.
Results drive optimism. 68% of small businesses report that they are on track to meet or exceed 2026 projections.
Businesses are acting based on continued confidence. 38% of small businesses plan to increase headcount in the next six months.
Top Challenges
Small businesses cite cash flow pressures as their top concern in Q1 (31%), surpassing inflation (29%) for the first time. This shift underscores the critical role of working capital as businesses pursue growth. While optimism remains, constrained cash flow is limiting businesses’ ability to fund operations and invest in expansion simultaneously.
Cash flow tops inflation. For the first time, cash flow is the top concern for small businesses (31%), surpassing inflation (29%).
The top reasons to apply for capital in Q1 included covering normal business expenses (38%), increasing cash flow (36%) and supporting business expansion (32%); these needs tend to be industry-specific. Retail stands out, with inventory cited as the top reason every quarter, 43% in Q1 versus 18% across all industries. Transportation and Warehousing is another clear outlier where equipment financing remains the dominant need, cited by 35% in Q1 versus 22% overall, highlighting the sector’s ongoing reliance on capital-intensive assets.
Businesses are actively managing these pressures through a range of strategies. For the seventh consecutive quarter, the top three strategies include using a business line of credit (58%), delaying payment to themselves or family (51%) and making the minimum payment on credit cards (42%). These strategies reflect a continued reliance on short-term liquidity solutions and underscore why businesses are seeking capital. This also aligns with Ocrolus cash flow data, which shows a 99.84% revenue-to-expense ratio across industries in Q1.
Median Monthly Revenue-to-Expense Ratio by Quarter
| Quarter | Accommodation & Food Services | Construction | Manufacturing | Professional, Scientific, & Technical Services | Retail Trade | Transportation & Warehousing | Wholesale Trade | All Industries |
|---|---|---|---|---|---|---|---|---|
| Q1 2025 | 99.93% | 100.87% | 100.56% | 100.16% | 101.13% | 101.87% | 100.27% | 100.50% |
| Q2 2025 | 100.60% | 101.94% | 100.87% | 101.48% | 101.16% | 101.82% | 100.62% | 100.98% |
| Q3 2025 | 100.42% | 101.80% | 100.81% | 100.24% | 100.97% | 101.80% | 100.74% | 100.83% |
| Q4 2025 | 99.79% | 101.22% | 100.62% | 100.00% | 100.87% | 101.69% | 100.77% | 100.47% |
| Q1 2026 | 99.65% | 100.11% | 100.44% | 99.81% | 100.63% | 101.64% | 100.49% | 99.84% |
As shown in the Ocrolus chart above, revenue-to-expense ratios remain relatively stable across industries but have edged down slightly in recent quarters, indicating tightening margins. Transportation and Warehousing industries continue to demonstrate comparatively strong operating performance, while Retail and Wholesale Trade remain more stable; most others industries are operating closer to break-even. Payroll-to-revenue ratios rose to 17% in Q1 (+5% YoY), indicating growing labor cost pressure.
Lender Preference
Access to timely and flexible capital has become increasingly important.
Over 76% of small businesses report bypassing traditional banks for capital — a survey all-time high. This number highlights a continued shift, particularly in Retail, where 82% of small business owners reported bypassing traditional banks in Q1 — the highest across industries. Among businesses that initially applied with a traditional bank, many cite friction in the process. This includes being denied (44%), lengthy approval timelines (29%) and complex application requirements (33%), while 28% point to more flexible terms from non-bank providers. Together, these factors underscore a clear shift in preference, as small businesses increasingly prioritize speed, flexibility and streamlined access to funding over traditional lending channels.
Access to capital remains the bottleneck. 44% of small businesses that approached a traditional bank first were denied.
Barriers to traditional lending persist. Of those who bypassed a traditional bank:
- 47% cite paperwork as a key challenge
- 30% cite concerns about qualifying
Median Monthly Debt Inflow Volumes of Applications by Quarter
| Quarter | Non-bank Debt Inflow | Bank Debt Inflow |
|---|---|---|
| Q1 2025 | $8,440 | $5,412 |
| Q2 2025 | $8,046 | $7,431 |
| Q3 2025 | $8,151 | $7,539 |
| Q4 2025 | $8,641 | $6,747 |
| Q1 2026 | $8,824 | $6,929 |
Continued reliance on non-bank lending is evident in Ocrolus cash flow data. The median monthly loan inflows increased steadily year-over-year (+5%) and quarter-over-quarter (+2%). Traditional bank loan inflows also rose year-over-year (+28%) and quarter-over-quarter (+3%), though they remain more variable over time and continue to trail non-bank inflows.
These findings are consistent with broader market trends. According to the Federal Reserve’s 2025 Small Business Credit Survey, 48% of applicants were either denied or did not receive the full amount they requested, while the percentage of businesses applying for credit increased one percentage point from 2024 to 2025, reinforcing the growing gap between funding needs and access.
2026 Planning Strategies
Access to credit (46%), consumer spending trends (42%) and interest rates (35%) remained the top three factors shaping small business strategy in Q1 2026, each increasing from Q4. In contrast, external macro factors such as trade policy (14%) have become less central to near-term planning.
Fifty-seven percent of businesses report changes in customer behavior in Q1, down from 62% in Q4, with most citing changes in average purchase size (55%), consistent with the prior quarter (54%).
These trends reflect increasing emphasis on both access to capital and demand visibility as small businesses navigate an evolving operating environment.
AI Adoption
Small businesses continue to expand their use of AI, with 58% reporting adoption in Q1 2026 (up from 56% in Q4). This is a continuing and steady upward trend observed from 2025. Eighty-nine percent of AI users report a positive impact on their business, most often measured by gains in marketing performance (40%), employee productivity (37%) and reduced rework (37%). AI use is most concentrated in marketing (64%) and business research (43%), underscoring its role in both driving demand and improving operational efficiency.
AI is delivering measurable impact. 89% of AI users report a positive impact on their business.
A 54% majority of small business owners report using AI tools and platforms specifically to search for information, an increase from 46% in Q4 2025. Among these users, ChatGPT is the most widely used tool (90%), followed by Google Gemini (33%) and Microsoft Copilot (21%).
Methodology
OnDeck analyzed survey responses from 651 current customers, who completed the survey March 4 – 10, 2026. Please note: We have not verified this data or survey responses. It may contain errors or inaccuracies, and we make no representations or warranties as to its reliability, accuracy or applicability. Customers received an incentive for completing the survey.
Purpose
The data is designed to reflect the cash flow, financial health and liquidity of small businesses in the United States. Through tracking the unique combination of data available to Ocrolus and OnDeck, it will be possible to understand the trends affecting small businesses, the economic environment in which they operate and their access to capital.
Data
Ocrolus receives data on hundreds of thousands of small businesses each month as part of applications for credit. The data consists of transactional bank data in the form of bank statements or digital bank data feeds, generally comprising the most recent 3 – 6 months prior to the time of application. Ocrolus then uses its proprietary transaction tagging and analytical capabilities to generate a detailed set of cash flow attributes for each business, thereby facilitating a lender’s understanding of its financial health and ability to service additional debt. The report is comprised of small business loan application data from the previous 15 months. Previous period figures often change slightly as new loan applications provide retrospective data.
Filtering/Exclusions
The data is filtered to include only applicants within the 50 U.S. states. Applicant data with partial bank accounts was filtered out for the latest report as the partial data was skewing values lower, particularly for the most recent months.
Calculations
For each small business, for each calendar month, Ocrolus calculates revenue, credits, debits, expense, payroll, non-sufficient-funds transactions, proceeds from lenders, payments to lenders and the use of alternative payment methods. The full data set can be viewed for each respective report via the downloadable results.