This funding report covers how US small businesses financed themselves through 2026. Every figure comes from a primary source we pulled and checked ourselves — the Federal Reserve's 2026 Report on Employer Firms and the Bureau of Labor Statistics Business Employment Dynamics series. No secondhand statistics, no estimates presented as findings.
Who is actually applying
Two numbers get quoted interchangeably and they are not the same thing. 86% of small employer firms use financing on a regular basis, and 60% applied for financing in the 12 months before the survey. But only 38% applied for a loan, line of credit, or merchant cash advance specifically — the narrower figure, and the one that matters if you are comparing yourself to businesses seeking the same products you are. The gap between 60% and 38% is credit cards and trade credit.
Why it matters: if you have been told “most businesses don't borrow,” that is wrong. Most do. What varies is the instrument.
What happens to applications
Of firms that applied, 42% received the full amount they sought. Another 36% received some or most of it, and 22% received nothing at all. Put plainly: 58% of applicants did not get everything they asked for.
Why it matters: a partial approval is the most common outcome after a full approval. Plan for the possibility that the number you are approved for is smaller than the number you applied for.
Where the money is coming from
The share of applicants seeking financing from online fintech lenders rose from 17% in the 2020 survey to 29% in the 2025 survey — a 12-point shift in five years. Large banks still take the most applications, followed by online lenders and small banks.
Applicants at small banks were the most likely to be fully approved, at 57% — better than large banks, online lenders, or finance companies.
The cost surprise
This is the finding most worth acting on. 60% of businesses that borrowed from an online lender reported that their actual borrowing costs were higher than they expected. At small banks that figure was 37%, and at large banks 32%. Only 4% of online-lender borrowers found costs lower than expected.
High interest rates and unfavorable repayment terms were the most commonly reported challenges with online lenders. The lesson is not to avoid online funding — it is to convert every offer to a comparable basis before signing.
What businesses borrow for
The two most common reasons firms sought financing were meeting operating expenses (56%) and pursuing an expansion or new opportunity (46%). Those are very different motives with very different risk profiles, and they split the market almost evenly.
Debt, guarantees, and collateral
31% of firms carry no outstanding debt at all — up from 21% in the 2020 survey, back to prepandemic levels. Among firms that do hold debt, 59% used a personal guarantee to secure it and 51% pledged business assets.
Why it matters: a personal guarantee is the norm, not an aggressive term. If you are being asked for one, that is ordinary. What deserves scrutiny is the rest of the agreement.
How long businesses actually last
Of the 677,876 private-sector establishments that opened in the year ending March 2015, 235,071 were still operating in March 2025. That is a ten-year survival rate of 34.7% — roughly one in three.
The curve is steepest early. About one in five closes in the first year, and half are gone by year five. But survival rates rise for those who make it: a business that reaches year six has a better than 92% chance of seeing year seven.
What this means if you are seeking funding
- Apply to more than one channel. Small banks approve at the highest rate, but they are slower. Online lenders are faster and price accordingly.
- Expect a partial. With 58% of applicants receiving less than they asked for, the amount you request should have room in it.
- Convert every offer to the same basis before choosing. Six in ten online-lender borrowers were surprised by their costs. That is a preventable surprise.
- A personal guarantee is standard. Three in five borrowers give one. Negotiate the terms around it rather than the fact of it.
Related reading: compare every funding option · how to compare offers · factor rate to APR calculator · merchant cash advance explained · business line of credit
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See What I Qualify For →Sources and method
Every figure was retrieved from the primary source and checked on 28 August 2026. Funding figures come from the Federal Reserve Banks' 2026 Report on Employer Firms, which reports the 2025 Small Business Credit Survey of employer firms. Survival figures come from the Bureau of Labor Statistics Business Employment Dynamics series, Table 7, tracking the cohort of private-sector establishments that opened in the year ending March 2015 through March 2025. Percentages are reported as published; we have not re-based, rounded, or combined them.
Federal Reserve Banks — 2026 Report on Employer Firms · U.S. Bureau of Labor Statistics — Business Employment Dynamics, Table 7