Small business insights: Businesses modernize payment options and remain optimistic for growth

Last week, Ocrolus and OnDeck released the third iteration of the Small Business Cash Flow Trend Report.

This quarterly survey features responses from 413 small businesses with working capital loans from OnDeckands. Cash flow data from over 2.3 million small business applications for working capital financing were processed by Ocrolus over 13 months ago.

Q2 results revealed new insights into the health of small businesses nationwide and continued trends from the two previous quarterly reports.

Optimism remains strong among business owners

Continuing a trend from the previous two reports, most small business owners feel optimistic about their ability to achieve moderate to significant growth over the next six months. While this number took a slight dip from Q1 to Q2 – 93% of respondents expressed optimism about future growth in Q1, compared to 91.5% in Q2—optimism remains strong across sectors.

Faced with challenges, including inflationary pressures and hiring qualified staff, more than a third of small businesses (38.3%) said they plan to increase the number of employees over the next six months.

Payment modernization continues

In both survey and cash flow data, small businesses are increasing acceptance of alternative and real-time payment methods. Driven by a mix of customer demand and efforts to improve business cash flows, small businesses are more flexible than ever in the types of payment they accept. While cash flow data shows that checks still account for 17% of revenue among small businesses, customers are increasingly opting for more modern, convenient payment methods.

In the past year, alternative and real-time payment methods have jumped significantly, with cash flow data showing a 14% increase in the percentage of payments received by alternative and real-time methods from June 2023 to June 2024 and an increase of 10% from Q1 2024 to Q2 2024. Survey respondents also reported an increase in accepting these types of modern payments, with 60.8% of survey respondents accepting alternative and real-time payments, up from 54.5% in Q1.

Access to credit remains a challenge

While 71% of businesses surveyed in Q2 reported having enough cash to cover at least one month or more of operating expenses, small businesses’ reliance on lines of credit has increased from 56% in Q1 to 61% in Q2. Meanwhile, accessing the credit small businesses need to grow and thrive remains challenging.

Looking specifically at bank funding, 50% of respondents cited the hassle of paperwork as their primary reason for not applying. Of the 25% who did apply in Q2, 33% were denied. This continues a trend from Q1, where nearly 40% of businesses operating for over 20 years reported loan denials. 

For additional insights on the state of small business cash flow, financial health and liquidity, including regional findings across the country, read the full report here.

Book a demo to discover how Ocrolus enables small business lenders to understand their customers better through cash flow analytics.

Key takeaways:

• Small businesses in the United States remain optimistic about their growth potential amid challenges, such as inflationary pressures and finding qualified employees.
• Small businesses are becoming more flexible in the types of payments they accept, including legacy and alternative, real-time methods.
• Accessing credit through bank funding remains challenging, while an increasing percentage of small businesses rely on lines of credit.