Main Street Monday — The Financing Dilemma: Fast Money vs. Cheap Money
Main Street Monday — The Financing Dilemma: Fast Money vs. Cheap Money
June 1, 2026
The Federal Reserve released its 2026 Report on Employer Firms, which collected responses from 6,525 small businesses nationwide and provides an interesting snapshot of credit availability on Main Street.
One finding highlights the challenge facing many small businesses.
Merchant cash advance providers approve applicants at significantly higher rates than SBA lenders. And quickly.
Merchant cash advance applicants received full approval 48% of the time and at least some approval 88% of the time, compared with SBA applicants who received full approval 32% of the time and at least some approval 60% of the time.
Forty-three percent of employer firms sought a business line of credit in the prior 12 months, making it the most-requested financing product, followed by business loans at 32%. SBA loans ranked third at 20%, ahead of equipment financing, merchant cash advances, and commercial real estate loans.
On an ongoing basis, credit cards remain the most widely used financing tool on Main Street, utilized by 62% of employer firms, followed by loans at 51%, lines of credit at 44%, and trade credit at 38%.
Borrowers continue to choose speed and certainty of funding over cost.
The tradeoff is price. The same survey found that 60% of borrowers using online lenders reported borrowing costs higher than expected, compared with 37% at small banks and 32% at large banks.
Types of Loans and Financing Products Sought
(% of employer firms applying in the prior 12 months)
- Business Line of Credit — 43%
- Business Loan — 32%
- SBA Loan — 20%
- Auto or Equipment Loan — 12%
- Merchant Cash Advance — 12%
- Personal Loan for Business Purposes — 8%
- Mortgage / Commercial Real Estate Loan — 6%
- Home Equity Loan or HELOC Used for Business — 5%
Traditional Debt Financing
Regularly used by employer firms:
- Credit Cards — 62%
- Loans (including mortgages) — 51%
- Lines of Credit — 44%
- Trade Credit — 38%
- Leases — 36%
- Merchant Cash Advances — 14%
- Factoring — 7%