National Funding Surpasses $2.5B Milestone

National Funding has reported record originations for 2025, surpassing the $2.5 billion mark in total small business financing. The milestone is an important data point for the alternative lending sector, signaling that despite, or perhaps because of, a high-interest-rate environment and tightened bank credit, the appetite for non-bank capital has never been higher.

The San Diego-based lender attributed the surge to a "perfect storm" of economic variables: persistent inflation, more aggressive bank de-risking, and a structural shift in how SMBs value speed over the cost of capital. For operators across the ecosystem, National Funding’s performance validates a core thesis: the "gap" in small business funding is no longer a niche, it’s the market.

The Velocity Premium: Why SMBs are Bypassing Banks

While traditional institutions still hold the lion’s share of deposits, their underwriting "moats", timelines, documentation, and rigid risk appetites continue to alienate the modern operator.

National Funding’s growth suggests that a "Velocity Premium" now exists. SMBs are increasingly willing to pay for capital that arrives in days rather than months. According to the company, this growth isn't siloed; it spans a broad vertical range, from construction to retail, where businesses are using capital not just for survival, but to capture market share while competitors are sidelined by credit freezes.

Data-Driven Underwriting as a Competitive Moat

The $2.5 billion figure is as much a tech story as it is a finance story. The sector’s scaling is being driven by the "Agentic" shift in underwriting, leveraging real-time bank transaction data and automated risk modeling to replace the antiquated paper trail.

For funders and fintech leaders, this trend represents a permanent shift in the competitive landscape. National Funding noted that its investment in proprietary tech has been the primary lever for streamlining the funnel for both brokers and direct applicants.

In 2026, the "winners" are those who can maintain risk discipline while removing the friction that defines traditional banking.

National Fundings Broker Network

Despite the rise of direct-to-consumer digital channels, National Funding’s record year reinforces a fundamental industry truth: The ISO and broker network is the lifeblood of distribution.

As competition for high-quality paper intensifies, the relationship between funders and ISOs has become more sophisticated. Strategic partnerships are no longer just about commission structures; they are about integration and reliability. For National Funding, the ability to scale originations was inextricably linked to its ability to serve the broker channel with consistent, predictable outcomes.