Here is what used to be true: when a small business needed money, it went to the bank.
Here is what is true now: according to a new report from OnDeck and Ocrolus, more than 76% of small businesses are bypassing traditional banks when they need capital - an all-time high.
That number comes from the May 2026 Small Business Cash Flow Trend Report, based on 651 small businesses with active working capital loans and more than 3.69 million loan applications analyzed over the past 15 months. It is not a survey of who feels unhappy with banks. It is a record of who is actually getting money from somewhere else.
Why the Shift Is Happening
The top reason? Speed.
Research from the Federal Reserve's 2026 Report on Employer Firms found that 64% of businesses choosing online lenders cited speed of funding as the primary reason - compared to just 20% for traditional banks. When your cash flow has a gap and rent is due Friday, a bank's 30-day underwriting timeline is not useful.
The Fed's data also shows how structural this shift has become. Online lender applications have risen for five consecutive years, reaching 29% of all small business loan applications in 2025 - up from 17% in 2020. That is not a blip. That is a migration.
And it is accelerating. In the OnDeck/Ocrolus report, access to credit ranked as the top factor shaping small business strategy for 2026, cited by 46% of owners - ahead of consumer spending (42%) and interest rates (35%).
Cash Flow Just Became the #1 Problem
That is a change worth paying attention to.
For years, inflation held the top spot on small business worry lists. This spring, it lost it. According to the OnDeck/Ocrolus report, cash flow is now the #1 concern for small business owners, cited by 31% - with inflation falling to second at 29%.
Think of it this way: inflation is what happens to your costs. Cash flow is what happens to your survival. The fact that more owners are prioritizing the gap between money in and money out - rather than the price of the inputs - suggests they are thinking in terms of operations, not macroeconomics.
That mental shift lines up exactly with why they are seeking faster capital, even at higher cost.
The Cost Is Real - and Worth Knowing
Here is the honest part: alternative lending is usually more expensive than a bank loan.
A previous Federal Reserve survey found that 60% of online borrowers said their borrowing costs were higher than they expected. OnDeck and other fintech lenders typically charge more per dollar than a traditional bank line of credit, because they are taking on more risk (faster approvals, lighter documentation requirements) and charging for the speed and accessibility.
What that means practically: if you borrow $50,000 from an online lender at a factor rate of 1.3, you repay $65,000. A bank loan at 8% APR over the same term would cost significantly less. The difference is that the bank loan might take a month or more to close - and require a stronger credit file, more documentation, and collateral.
The trade-off is real. It is just being made deliberately.
The Optimism Is Genuinely High - and That Is Part of the Story
One more number from the report that deserves its own sentence: 93% of small businesses expect growth in the next year. And 32% expect significant growth - the highest figure in the survey's history.
That is not cognitive dissonance. That is leverage.
Businesses that are confident they will grow are more willing to pay more for capital today to fund that growth tomorrow. The premium on speed and accessibility looks different when you believe you are about to need more of both.
The businesses skipping the bank are not desperate. Many of them are ambitious.
What to Actually Do With This Information
If you currently use a traditional bank for all of your borrowing, the numbers here are not telling you to switch. They are telling you to have a backup.
Practical moves worth considering:
Get pre-approved before you need it. OnDeck, Kabbage, and similar lenders allow pre-qualification without a hard credit pull. Knowing your options before a gap appears is better than scrambling when one does.
Understand your factor rate vs. APR. Alternative lenders often quote in "factor rates" (e.g., 1.2 on a $100k loan = $120k repaid) rather than APR. Run the APR equivalent before you sign. The math is not complicated but it does require you to ask.
Match the instrument to the need. A term loan from an online lender at a higher rate makes sense for a capital investment with a clear ROI (new equipment, a location build-out). It makes less sense for covering operating expenses month after month. Know which problem you are solving.
Ask your current bank what they can actually do quickly. Some community banks and credit unions have dramatically shortened approval timelines in response to fintech competition. Your bank may have options you do not know about.
The 76% statistic is not an endorsement of alternative lending. It is a data point about what is actually happening in the market - and a useful mirror for thinking about whether your own capital strategy reflects your current business reality.
Sources: OnDeck/Ocrolus May 2026 Small Business Cash Flow Trend Report; Federal Reserve 2026 Report on Employer Firms