New Report: Main Street Optimism Remains High as Digital Financing and Payment Solutions Expand

Rhea-AI Summary

The latest Small Business Cash Flow Trend Report from OnDeck and Ocrolus reveals high optimism among small businesses about future growth. Key findings include:

1. A majority of small businesses are optimistic about growth opportunities in the next 12 months.

2. 60.8% of businesses now accept alternative payment methods, up from 54.5% in Q1.

3. Nearly 75% of small businesses bypassed traditional bank loans for alternative lenders.

4. 50% of accommodation and food services businesses plan to increase headcount in the next six months.

5. Retail businesses are most consistent in accepting alternative payments.

The report is based on responses from 413 small businesses and data from over 2.3 million small business applications, providing insights into small business health across all regions.

Positive

• Majority of small businesses optimistic about growth opportunities
• 60.8% of businesses now accept alternative payment methods, up from 54.5% in Q1
• Nearly 75% of small businesses sought alternative lenders as primary funding option
• 50% of accommodation and food services businesses plan to increase headcount

Negative

• None.

Insights

Financial Analyst

The report highlights positive trends for small businesses, which could have broader implications for the economy and financial services sector. The high level of optimism among small businesses, with a large majority expecting growth opportunities, suggests a potentially robust economic environment. This could lead to increased demand for financial services and products tailored to small businesses.

The shift towards alternative and digital payment methods, with 60.8% of businesses now accepting them (up from 54.5% in Q1), indicates a significant market opportunity for fintech companies and payment processors. This trend could potentially benefit Enova, as OnDeck may be well-positioned to capitalize on this digital shift.

Perhaps most notably, the report reveals that nearly 75% of small businesses are bypassing traditional bank loans in favor of alternative lenders. This is a substantial market shift that could significantly benefit OnDeck and, by extension, Enova. The company's position as a leading small business lender in this growing alternative finance space could translate to increased loan volumes and revenue growth.

Market Research Analyst

The report provides valuable insights into small business trends that could impact various sectors. The planned headcount increase in the accommodation and food services industry (50% of businesses) suggests potential growth in this sector, which could have positive ripple effects on related industries such as food suppliers, equipment manufacturers and commercial real estate.

The retail sector's lead in alternative payment adoption (84% acceptance rate) indicates a shift in consumer behavior and expectations. This trend could drive innovation in payment technologies and create opportunities for companies developing or integrating these solutions.

The increasing reliance on alternative lenders and digital financing solutions points to a significant market shift. This could potentially disrupt traditional banking models and create opportunities for fintech companies and alternative lenders like OnDeck. However, it's important to note that this shift might also attract more competition in the alternative lending space, potentially impacting profit margins in the long term.

CHICAGO, Sept. 26, 2024 /PRNewswire/ -- Small businesses are overwhelmingly optimistic about their future growth, according to the latest Small Business Cash Flow Trend Report from OnDeck, the leading small business lending company at Enova (NYSE: ENVA) and Ocrolus, the document AI and cash flow analytics platform for lenders.

Key findings include:

• Optimism and Growth. A large majority of small businesses remain optimistic about business growth opportunities over the next 12 months.
• Payments: The use of alternative and digital payment methods continues to grow, as 60.8% of businesses reported accepting alternative payment methods, up from 54.5% in Q1. This movement indicates an increasing level of interest from customers for more flexible and convenient payment options.
• Alternative Financing: Small businesses are becoming less reliant on traditional banks for capital – nearly 75% of small businesses reported bypassing a traditional bank loan and instead sought out alternative lenders as their primary funding option.

"Small businesses remain confident in their near-term and future growth prospects as inflation cools," said Cory Kampfer, Co-President of Small Business Lending at OnDeck. "It's also very clear from our survey data that small businesses are increasingly turning to digital solutions to secure lending and facilitate payments, suggesting small business owners are becoming less reliant on traditional financial services."

"As more small businesses seek out alternative financing, real-time cash flow data is integral to enable lenders to expand their deployment of capital to a broader set of small business borrowers across industries," said David Snitkof, SVP of Growth at Ocrolus.

Key demographic findings include:

• 50% of accommodation and food services small businesses shared that they plan to hire/increase their headcount over the next six months, representing a higher percentage than any other industry represented in the survey.
• Retail-based small businesses appeared to be the most consistent in accepting alternative payments, as only 16% of retail small business respondents shared that they didn't accept alternative payments, the lowest among all industry groups.

The Q2 2024 report is based on quarterly survey responses from 413 small businesses with working capital loans from OnDeck and cash flow data from over 2.3 million small business applications, and provides deeper insights into the health of small businesses across all regions.

About OnDeck®
OnDeck®, part of Enova International, is the proven leader in transparent and responsible online lending to small businesses. Founded in 2006, the company pioneered the use of data analytics and digital technology to make real-time lending decisions and deliver capital rapidly to small businesses online. Today, OnDeck offers a wide range of term loans and lines of credit customized for the needs of small business owners. OnDeck has provided loans to customers in 900 different industries nationwide. For more information, visit www.ondeck.com.

About Enova
Enova International (NYSE: ENVA) is a leading financial services company with powerful online lending that serves small businesses and consumers who are underserved by traditional banks. Through its world-class analytics and machine learning algorithms, Enova has provided more than 10.5 million customers with over $56 billion in loans and financing. You can learn more about the company and its portfolio of businesses at www.enova.com.

About Ocrolus
Ocrolus is a document AI platform that enables faster and more accurate financial decision-making. The company analyzes documents with over 99% accuracy, regardless of format or quality, supporting over a thousand document types, including bank statements, pay stubs, and tax forms. Ocrolus provides a trusted solution to detect fraud, analyze cash flows and income, and streamline decisions for 500+ clients across a number of use cases. Customers such as Enova, PayPal, Brex, CrossCountry Mortgage, Plaid, and SoFi leverage Ocrolus automation to build delightful user experiences. To learn more, visit Ocrolus.com.

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SOURCE Enova International, Inc.

FAQ

What percentage of small businesses are using alternative payment methods according to the OnDeck report?

According to the OnDeck report, 60.8% of businesses reported accepting alternative payment methods, up from 54.5% in Q1.

How many small businesses are choosing alternative lenders over traditional banks for funding?

The report indicates that nearly 75% of small businesses reported bypassing a traditional bank loan and instead sought out alternative lenders as their primary funding option.

Which industry sector plans to increase headcount the most in the next six months?

According to the report, 50% of accommodation and food services small businesses shared that they plan to hire or increase their headcount over the next six months, representing a higher percentage than any other industry in the survey.

How many small businesses were surveyed for the OnDeck and Ocrolus Q2 2024 report?

The Q2 2024 report is based on quarterly survey responses from 413 small businesses with working capital loans from OnDeck.