Small Business Cash Flow Report: Key trends driving small business growth

Ocrolus and OnDeck recently released the latest edition of the Small Business Cash Flow Trend Report, uncovering valuable insights on U.S. small business trends and sentiment from Q4 2024.

The report is based on survey responses from 454 small businesses as well as cash flow data from over 3 million small businesses who applied for working capital financing.

The findings of the report reinforce an optimistic outlook for 2025 while identifying key trends surrounding businesses’ access to credit and cash flow management.

Reliance on non-bank lenders is increasing

A recurring trend in the Small Business Cash Flow Trend Report is a shift away from traditional financing among small businesses. In Q4, Ocrolus and OnDeck’s report found that nearly 76% of small business owners who applied for funding opted for a non-bank lender over a traditional bank.

This number is up from 73% in Q3 2024, and it is significantly higher than the 61.5% reported a year ago in Q4 2023.

Non-bank funders are often a more viable option for small businesses operating with low revenue or limited credit history, as these funders increasingly prioritize cash flow data when assessing credit worthiness. This shift towards a cash flow-first underwriting funnel is enabled by AI-powered document automation, which has increased accessibility of cash flow data and efficiency in bank statement processing.

In line with this trend, Ocrolus’ lender analytics uncovered that most small businesses applying for funding operate at relatively low revenue levels. From July to December 2024, Ocrolus processed nearly 900,000 applications for small business funding. Of these applications, nearly 30% came from businesses with less than $25,000 in monthly revenue.

Additionally, Ocrolus quarterly application data shows smaller businesses and sole proprietorships are continuing to apply for loans at an increased rate. The number of applications from small businesses that do not have paid employees increased by 58% year-over-year, while applications from employer firms increased by 45% over the same time period.

Stability in fintech funding

In Q4, fintechs were a stable source of funding for small businesses while bank funding tightened. Fintech loan inflows decreased only slightly in Q4, by 1%. On the other hand, traditional bank loan inflows dropped by nearly 25% – a considerable figure.

This trend is especially visible in non-urban or rural areas, but it is also affecting major cities. In San Francisco, for example, fintech inflows increased by 10%. Overall, metro bank loans grew by a slight 3% while non-metro bank loans declined by 26%.

Growth prospects remain strong

Small businesses continue to share a strong sense of optimism for the future, as the Q4 report once again backed the trend of increasing growth expectations among small businesses.

94% of small business owners are anticipating significant or moderate growth in 2025. This number is up two percentage points from Q3. Meanwhile, respondents anticipating “no growth” in 2025 dropped to an all-time low of 5.9%.

This sense of optimism is factoring into small business’ hiring plans. 39% of small business owners expect to increase headcount within their organizations over the next six months.

The role of AI in funding U.S. small businesses

Regardless of size, access to capital is critical for small businesses’ ability to realize their anticipated growth.

Often, these businesses opt for the first funding offer they receive. Funders can capitalize off this trend and grow their business by prioritizing smooth and efficient application and underwriting processes.

Ocrolus’ AI-driven document automation and cash flow analysis provides funders with a comprehensive view of businesses’ financial health, while reducing the manual workload of document review. With the ability to instantly and efficiently process a wide range of borrower-submitted data, funders can leverage AI to not only underwrite more loans at a quicker pace, but to lend with added confidence driven by cash-flow-based risk models as well.

To learn more about the trends driving U.S. small businesses, view the complete Small Business Cash Flow Trend Report here.

Key takeaways

• Small businesses’ reliance on non-traditional funders is growing, as 76% of small business owners who applied for funding opted for a non-bank lender over a traditional bank.
• Small businesses continue to be optimistic for future growth, with 94% of owners anticipating significant or moderate growth this year.
• Access to capital is key to small businesses’ ability to thrive. AI-driven document automation helping funders make more efficient underwriting decisions to improve access to capital.