Why the Fed’s 2026 Report on Merchant Cash Advances Feels Personal

I spend my days talking to business owners about financing. So when the Federal Reserve released its 2026 Report on Employer Firms, I read it with one question: does this match what I hear?

It does.

38 percent of small firms applied for financing in the prior 12 months. 8 percent specifically sought merchant cash advances. Online lender applications have risen for five consecutive years, from 17 percent in 2020 to 29 percent in 2025.

The report shows 60 percent of online borrowers paid higher than expected costs. That matters. But when speed equals survival, the calculation changes.

Small businesses are not choosing MCAs because they are cheap. They are choosing them because they are fast. The data just backs up what I see daily.

Source: 2026 Report on Employer Firms, Small Business Credit Survey, Federal Reserve Banks, March 2026. https://www.fedsmallbusiness.org/2026-report-on-employer-firms?utm_source=Reserve-Banks&utm_medium=social&utm_campaign=sbcs-marketing