The latest findings from the Federal Reserve reveal that many small business owners still struggle to secure funding. This affects not just business owners but also everyday consumers who rely on these companies for jobs and services.

Current Trends in Small Business Financing

A recent report from the Federal Reserve highlighted some concerning trends in small business financing. The 2026 Report on Employer Firms indicates that a significant 38% of small businesses applied for loans or other forms of credit in the past year. This figure shows no change from 2024, signaling a persistent challenge for small owners. One alarming aspect of the findings is that full approval rates for these loans continue to lag behind pre-pandemic levels.

As small businesses look for alternative sources of financing, many are turning to online lenders. The share of applicants seeking funds from these fintech lenders shot up from 17% in 2020 to 29% in 2025. Interestingly, those who chose to apply through small banks experienced higher approval rates, at 57%. This suggests that while many businesses are exploring new avenues, they might find better chances of success with traditional financial institutions.

Understanding Funding Denials

In response to these challenges, CredFin, Inc. has stepped in to help business owners understand the rationale behind loan denials. They recently launched a free field guide titled “They Denied You. They Didn’t Tell You Why.” This guide sheds light on the common reasons lenders say “no” and offers steps for owners to improve their chances of getting funding in the future.

Ray Smith, Founder and CEO of CredFin, emphasizes the importance of transparency in the lending process. He uses his own experiences in the financial industry to drive home the point that small business owners deserve to know why they are denied funding and what they can do to change that. His view is that all entrepreneurs, especially those who navigate tough times, should have access to information that can help them succeed.

A New Approach to Funding

CredFin has developed a specialized platform called the Capital Qualified™ + Lender Match™ System. This innovative tool aims to guide business owners from the denial stage to securing funding. It assists users in understanding the underlying reasons for their funding denials while also helping them build a credit profile that meets lenders’ expectations.

So far, thousands of small business owners nationwide have utilized this platform. By focusing on the real factors that affect their loan applications, they can better prepare themselves for future opportunities. Instead of relying on personal credit scores, which may not reflect the business’s true financial health, applicants can present a more robust business credit profile tailored for lenders.

What this means for you

These developments in small business financing can impact you, especially if you are a customer or employee of a small business. The success of these businesses directly affects job availability and the variety of services you receive. If you ever need to review loan agreements or financing documents, legal-document-to-plain-english-translator/”>AI legalese decoder can translate it into plain English in seconds. Understanding the financing landscape can help you make informed choices as a consumer or employee.

Source: https://www.globenewswire.com/news-release/2026/06/22/3315251/0/en/banks-deny-we-defy-new-federal-reserve-data-confirms-the-funding-gap-crushing-small-businesses-and-credfin-is-helping-thousands-fight-back.html