Inflation Just Passed Cash Flow at the Top of the Worry List, New Report Shows

Small business owners are as optimistic as they were three months ago. What's keeping them up at night has changed anyway, and that shift should change how you're selling, according to the Q2 report from Ocrolus and OnDeck.

There's a quiet finding in the recent OnDeck and Ocrolus Small Business Cash Flow Trend Report for Q2 that's worth diving into.

Optimism held. Owners are looking at the next twelve months about the same way they did in Q1: steady, growth-minded, not flinching. Nothing dramatic there.

But the top of the concern list flipped. Inflation is back in the number one spot at 34%, edging past cash flow at 30%.

Four points. Easy to skim past. Don't.

Same confidence, different fear

Think about what those two worries actually mean when a merchant is sitting across from you.

When cash flow is the top concern, the conversation is about timing. Payroll lands Friday, the receivable lands the following Thursday, and the merchant needs a bridge. Speed closes that deal. How fast can I fund, or what do you need from me, or when does it hit?

When inflation is the top concern, the conversation is about margin. Suppliers raised prices again. The merchant is deciding whether to pre-buy inventory ahead of the next increase, whether to eat the cost or pass it through, and whether the equipment quote from March is still good in September.

Those are different problems. They call for different-sized deals, different terms, and a completely different opening question. If your pitch still leads with "how fast do you need it," you're answering a question fewer merchants are asking this quarter.

One quarter isn't a trend, and four points isn't a chasm. But it's a signal, and it's free.

The dataset behind it

Here's what makes this report worth reading rather than skimming.

The survey side runs on 805 small businesses that actually hold working capital loans. That's a narrower panel than a general population poll, and that's precisely why it's useful. This is the population you actually sell to, answering about the financing they actually took.

Underneath the survey sits something bigger: cash flow data drawn from 3.76 million small business applications for working capital financing across the trailing 15 months. Not an opinion. Money moves through business bank accounts, read at a scale almost nobody outside the Federal Reserve can match.

And that dataset is where the most consequential line in the report lives. Per Ocrolus GM of Small Business David Snitkof, non-bank loan inflows rose year over year, while traditional bank loan inflows declined.

Read that again. Not "small businesses say they prefer alternative lenders." Not a preference at all. Actual dollars, actually landing in a mix that is shifting away from banks and toward the rest of us.

The direction gets independent corroboration from OnDeck's own parent. Enova reported Q2 small business originations up 29% year over year, with small business revenue up 35%. Two different measurements, two different methods, one direction.

What else is in there

A few findings we aren't spoiling, because they deserve the full context the report gives them:

The share of small businesses going around traditional banks entirely held steady at a level that should make every bank's small business lending head uncomfortable. And AI adoption crossed a threshold this quarter that reframes it from experiment to operating tool, with the satisfaction numbers among users running higher than I expected.

Both are worth the click. The full report is here.