Three out of four small businesses bypassed traditional banks when they needed working capital in the second quarter of 2026, according to the Q2 Small Business Cash Flow Trend Report from OnDeck — Enova’s small business lending arm — and the AI document platform Ocrolus. The report, released July 31, pairs a survey of 805 small businesses with cash flow data drawn from more than 3.76 million financing applications over 15 months.
The headline finding from the survey side was optimism: 93% of owners expect moderate to significant growth over the next year. The finding that will actually show up on a set of books is the financing one — and specifically what non-bank capital does to a company’s interest expense and its cash conversion cycle.
What happened
The Q2 2026 report surveyed 805 small businesses holding working capital loans between June 16 and June 24, alongside application-level cash flow data from Ocrolus.
Key figures:
- 75% of small businesses bypassed traditional banks for working capital in Q2.
- Non-bank loan inflows rose year over year, while traditional bank loan inflows declined.
- 93% of owners expect moderate to significant growth in the next 12 months, steady with Q1.
- Inflation reclaimed the top concern spot at 34%, ahead of cash flow at 30%.
- 61% report using AI, up from 58% in Q1; 91% of those users describe the impact as positive.
Executives from both firms framed it as a structural shift rather than a blip. Cory Kampfer, Co-President of Small Business Lending at Enova, said owners “are staying focused on growth even as cost pressures shift.” David Snitkof, General Manager of Small Business at Ocrolus, said small businesses “are steadily shifting capital access methods; lenders with better data visibility are winning.”
Why it matters
A three-in-four bypass rate is not a preference finding. Non-bank working capital is generally faster to close and lighter on documentation, and it is generally more expensive — often materially so, and frequently priced as a fixed fee or a daily/weekly remittance rather than an APR you can compare against your bank line.
That difference is invisible on a P&L until you go looking for it. Fee-priced financing tends to land in a general “bank charges” or “financing costs” account rather than in interest expense, which means the true cost of capital never shows up as a single number anyone reviews. Meanwhile, daily or weekly automatic remittances change the shape of your operating cash — the balance you can safely hold against payroll is lower than your bank balance suggests, because a fixed draw comes out regardless of what your receivables did that week.
This also connects to a finding from earlier this reporting season: with the Fed benchmark still at 3.50–3.75% and businesses reporting heavier credit-card reliance when receivables run late, the cheapest fix for a working-capital gap is often not a financing product at all. It is collecting faster.
What this means for small business owners
Convert every financing offer to an annualized cost before you compare it. A “1.25 factor rate” and a “9% line of credit” are not comparable numbers as quoted. Compute total dollars repaid, divide by the average outstanding balance, and annualize over the actual repayment period. Short terms make fee-based products look cheaper than they are.
Give non-bank financing its own GL account. Do not let merchant advances, revenue-based financing, and factoring fees settle into a generic bank-fees bucket. A dedicated account — separate from bank interest — is what makes the annual cost of capital visible at year-end and what makes the deduction defensible.
Model daily and weekly remittances in your cash forecast, not just monthly debt service. A 13-week cash flow that assumes one monthly payment will overstate available cash in every week a remittance falls. Match the forecast to the actual draw schedule.
Fix the receivables side before you price the financing side. If you are borrowing at non-bank rates to cover a gap created by slow collections, tightening terms is the cheaper intervention. Shorter terms materially reduce how many invoices go past 30 days, and that gap is often the entire reason the working capital was needed.
Check whether you’d actually be declined. A meaningful share of owners skip bank applications on the assumption of paperwork or rejection rather than on an actual denial. If your books are clean and current, a bank line is worth pricing — and clean books are the qualifying condition, not an afterthought.
The bottom line
The shift toward non-bank working capital is real and, per this data, still accelerating. That is not automatically a problem — speed has value, and 93% of owners are planning for growth they need funding to reach. The problem is that these products are easy to buy and hard to see once they are on the books. Price them honestly, account for them separately, and forecast them on their real payment schedule, and the choice stays a business decision rather than a surprise you find at year-end.
