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New report shows 38 percent of firms sought financing, with merchant cash advances and online lenders gaining ground despite higher costs
SHERIDAN, Wyo. - Wyomir -- The Federal Reserve Banks released its 2026 Report on Employer Firms, revealing small business owners are prioritizing speed of funding over lowest cost.
According to the report, 38 percent of small employer firms applied for financing in the prior 12 months. Eight percent specifically chose merchant cash advances, while applications at online lenders climbed to 29 percent in 2025, up from 17 percent in 2020.
Sixty percent of borrowers from online lenders reported paying higher than expected borrowing costs. Yet they still chose these options because when payroll is due, speed of funding outweighs cost considerations.
"The Federal Reserve data validates what I hear from business owners every single day," said Ali Barkhordar, Founder at Ultimate Business Capital. "This is not a story about businesses preferring expensive capital. It is a story about businesses needing accessible capital that shows up when it is needed. When speed equals survival, the math changes."
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Key findings:
"Small businesses are solving immediate operational challenges," Ali Barkhordar explained. "The funding gap is real, and the urgency is real."
Eight percent of firms chose merchant cash advances. Applications at online lenders climbed from 17 percent in 2020 to 29 percent in 2025.
"Business owners are pragmatic," Ali Barkhordar observed. "If an online lender can fund them in 48 hours versus a bank's 45-day process, the choice is obvious."
Ultimate Business Capital, founded by Ali Barkhordar, provides specialty finance solutions and merchant cash advances to small businesses across the United States.
Media Contact:
Ali Barkhordar Founder Ultimate Business Capital https://www.ultimatebusinesscapital.com
Source: 2026 Report on Employer Firms, Small Business Credit Survey, Federal Reserve Banks, March 2026. https://www.fedsmallbusiness.org/2026-report-on-employer-firms?utm_source=Reserve-Banks&utm_medium=social&utm_campaign=sbcs-marketing
According to the report, 38 percent of small employer firms applied for financing in the prior 12 months. Eight percent specifically chose merchant cash advances, while applications at online lenders climbed to 29 percent in 2025, up from 17 percent in 2020.
Sixty percent of borrowers from online lenders reported paying higher than expected borrowing costs. Yet they still chose these options because when payroll is due, speed of funding outweighs cost considerations.
"The Federal Reserve data validates what I hear from business owners every single day," said Ali Barkhordar, Founder at Ultimate Business Capital. "This is not a story about businesses preferring expensive capital. It is a story about businesses needing accessible capital that shows up when it is needed. When speed equals survival, the math changes."
More on wyomir.com
Key findings:
- 38 percent of firms applied for financing
- 42 percent received the full amount sought
- 22 percent received no funding
- Operating expenses drove 56 percent of applications
"Small businesses are solving immediate operational challenges," Ali Barkhordar explained. "The funding gap is real, and the urgency is real."
Eight percent of firms chose merchant cash advances. Applications at online lenders climbed from 17 percent in 2020 to 29 percent in 2025.
"Business owners are pragmatic," Ali Barkhordar observed. "If an online lender can fund them in 48 hours versus a bank's 45-day process, the choice is obvious."
Ultimate Business Capital, founded by Ali Barkhordar, provides specialty finance solutions and merchant cash advances to small businesses across the United States.
Media Contact:
Ali Barkhordar Founder Ultimate Business Capital https://www.ultimatebusinesscapital.com
Source: 2026 Report on Employer Firms, Small Business Credit Survey, Federal Reserve Banks, March 2026. https://www.fedsmallbusiness.org/2026-report-on-employer-firms?utm_source=Reserve-Banks&utm_medium=social&utm_campaign=sbcs-marketing
Source: Ultimate Business Capital LLC
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