Small Business Cash Flow Trend Report
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About the Trend Report
Through an ongoing partnership, OnDeck and Ocrolus have released the fourth iteration of the Small Business Cash Flow Trend Report. OnDeck is the leading small business lending company at Enova, and Ocrolus is a document AI and cash flow analytics platform for lenders. The report is based on two inputs:
- Quarterly customer survey responses from 525 small businesses with working capital loans from OnDeck across all regions. These businesses generally have fewer than 30 employees and less than $10M in revenues.
- Quarterly median cash flow data from over 2 million small businesses who applied for working capital financing during each quarter of a 15-month period.
The results from the Q3 2024 report revealed new insights regarding the health of small businesses as well as continuing trends from the three previous quarterly reports.
Q3 2024 Key Findings
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Point 1
Optimism and Growth. Small business owners continue to feel optimistic, with over 92% reporting that they expect moderate to significant growth over the next six months. This is consistent with the 91.5% reported in Q2, suggesting small business owners remain confident heading into the holiday season.
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Point 2
Succession Planning and Maintaining Control. The survey shows 58% of family-owned businesses plan to pass ownership to family members. This indicates a strong interest in financial independence and building generational wealth.
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Point 3
Payment Dynamics. Businesses continue to diversify their payment options and take advantage of fast deposits, with 62% of business owners reporting acceptance of alternative and real-time payment methods (up from 55% in Q1).
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Point 4
Access to Working Capital and Cash Flow Management. Businesses continue to report less reliance on traditional bank loans. In Q3, 73% of small business owners reported bypassing traditional bank loans in favor of alternative lenders, similar to Q2.
Optimism and Growth
Small business owners are showing strong optimism heading into the holiday season amidst the eleventh consecutive quarter of GDP growth, according to the U.S. Bureau of Economic Analysis, with 92% expecting moderate to significant growth over the next six months. This is consistent with 91% in Q2 of 2024 and suggests sustained confidence despite economic uncertainty.
The healthcare and social assistance sector is the most optimistic, with nearly 97% anticipating growth, up from nearly 93% in the previous quarter. The professional and technical services industry follows closely, with 94% expressing optimism, while accommodation and food services report nearly 93%. Despite being the least optimistic, the manufacturing industry still sees improvement, with nearly 86% projecting growth compared to 83% in Q2 of 2024.
Future Growth Expectations
| Quarter | Significant Growth | Moderate Growth | No Growth |
|---|---|---|---|
| Q4 2023 | 25.80% | 65.80% | 8.40% |
| Q1 2024 | 30.80% | 61.80% | 7.30% |
| Q2 2024 | 29.83% | 62.20% | 8.50% |
| Q3 2024 | 27.2% | 65.0% | 7.8% |
Consistent hiring plans further support this optimism, with almost 38% of all small businesses planning to bring on additional staff, consistent with Q2. Another optimistic bright spot includes immigrant- and veteran-owned businesses.
97% of immigrant-owned businesses are forecasting growth, up from nearly 95% in Q2.
Almost 97% of veteran-owned businesses are expecting growth, a significant confidence boost, up from 85% last quarter.
Succession Planning and Maintaining Control
Family-owned businesses expressed a strong interest in keeping ownership within the family, suggesting a desire to maintain control and build generational wealth. In Q3, 58% of family-owned businesses reported plans to pass their operations on to family members.
This preference for maintaining family control is reflected in lower desire to take investments from third parties; other results indicate a preference for unsecured loans for working capital to support growth. The survey showed that just 28% of family-owned businesses are open to selling to non-family members such as key employees; only 11% expressed openness to taking on non-family investors.
Enova contributed to a significant research initiative between the Olin Business School at Washington University in St. Louis and the Brookings Institution on the “silver tsunami” in small businesses. The initiative explored ownership transitions and the changing landscape of succession, reflecting similar trends regarding the desire to maintain control and pass the business on to family members.
Payment Dynamics
Businesses continue to diversify their payment options to keep pace with consumer preferences and streamline cash flow. In the Q3 survey, more than 62% of small businesses accepted alternative and real-time payment methods, showing a significant increase from 55% in Q1, with apps including Zelle, PayPal, Venmo, Apple Pay and Google Pay most cited.
Growth of Alternative Payments
| Month / Year | Percentage |
|---|---|
| Jul '23 | 20.38% |
| Aug '23 | 20.56% |
| Sep '23 | 20.14% |
| Oct '23 | 20.30% |
| Nov '23 | 19.80% |
| Dec '23 | 19.90% |
| Jan '24 | 20.86% |
| Feb '24 | 22.03% |
| Mar '24 | 22.97% |
| Apr '24 | 23.83% |
| May '24 | 24.73% |
| Jun '24 | 24.26% |
| Jul '24 | 25.13% |
| Aug '24 | 24.89% |
| Sep '24 | 25.26% |
Cash flow data representing the percent of small businesses accepting payments through Venmo, Zelle and Cash App also demonstrates an increase in acceptance of alternative payment methods - a 23% increase when comparing Q3 2023 to Q3 2024.
Survey results show retail emerging as the leading industry in adopting alternative payments, with more than 85% of retail businesses offering multiple options, up slightly from 84% in Q2. Looking at ownership type, minority-owned businesses led the way, with 75% accepting alternative payments. In looking at cash flow data, alternative payment methods now account for over 6% of revenue processed, up from 5% in Q3 of 2023.
Access to Working Capital and Cash Flow Management
Small businesses are increasingly looking for flexibility and availability, turning to non-bank lenders over traditional banks for financing. This shift highlights a rising demand for faster, more adaptable funding options to meet cash flow needs more effectively.
Accessing traditional credit continues to be challenging, with 47% of businesses that applied for bank loans reporting to be denied — up from one-third the previous quarter.
Long-established businesses, particularly those operating for over 21 years, faced notable difficulties, with 40% experiencing loan denials.
Since the report's initial launch in Q4 of last year, small business owners have consistently identified the impact of inflation on expenses and insufficient cash flow as their top concerns. Over 72% of businesses reported having enough cash to cover at least one month of operating expenses — a slight but steady improvement over previous quarters. Although inflation remains a key worry, its impact has eased, with 38% citing inflation-related cost pressures in Q3, down from 44% in Q2.
In the third quarter, 73% of small business owners chose alternative lenders first — a 19% increase since the initial report in Q4 2023.
Top reasons for bypassing traditional banks: 47% of small business owners note excessive paperwork and 34% doubt their chances of being approved.
Looking at Bank vs. Non-Bank Loans
Non-bank lenders are narrowing the gap in loan amounts compared to banks. Cash flow data reveals that the gap in median quarterly loan inflows between banks and non-banks has significantly narrowed over the last three quarters. This could be due to a contraction in bank lending — which is also reflected in the Federal Reserve’s SLOOS data — while non-banks maintained a steadier inflow.
As businesses enter the last quarter of the year, Ocrolus quarterly application data shows smaller businesses are applying for loans at an increased rate compared to last year, reflecting strong sentiment and expected growth.
Median Monthly Revenue of Applications by Quarter
| Quarter / Year | Median Monthly Revenue |
|---|---|
| Q3 2023 | $60,992 |
| Q4 2023 | $64,137 |
| Q1 2024 | $58,568 |
| Q2 2024 | $56,717 |
| Q3 2024 | $54,928 |
Historically, the revenue figures for the end-of-quarter month adjust up on average by 5% due to new loan applications providing retrospective data; the revenue figure above reflects this adjustment.
A variety of lender types rely on Ocrolus to process bank statements, with a majority being non-bank lenders; this sample represents trends in applicants who prefer bank statement analysis. The format of this graph has been updated to make it clear that the data is only for the applicants’ median monthly revenues during the specific quarter, and does not represent business revenues for the same businesses over time.
Methodology
OnDeck analyzed survey responses from 525 current customers, who completed the survey September 23 - 30, 2024. Please note: we have not verified this data or survey responses. It may contain errors or inaccuracies, and we make no representations or warranties as to its reliability, accuracy or applicability. Customers received an incentive for completing the survey.
Purpose
The data is designed to reflect the cash flow, financial health and liquidity of small businesses in the United States. Through tracking the unique combination of data available to Ocrolus and OnDeck, it will be possible to understand the trends affecting small businesses, the economic environment in which they operate and their access to capital.
Data
Ocrolus receives data on hundreds of thousands of small businesses each month as part of applications for credit. The data consists of transactional bank data in the form of bank statements or digital bank data feeds, generally comprising the most recent 3 - 6 months prior to the time of application. Ocrolus then uses its proprietary transaction tagging and analytical capabilities to generate a detailed set of cash flow attributes for each business, thereby facilitating a lender’s understanding of its financial health and ability to service additional debt. The report is comprised of small business loan application data from the previous 15 months. Previous period figures often change slightly as new loan applications provide retrospective data.
Filtering/Exclusions
The data are filtered to include only applicants within the 50 U.S. states. Applicant data with partial bank accounts were filtered out for the latest report as the partial data was skewing values lower, particularly for the most recent months.
Calculations
For each small business, for each calendar month, Ocrolus calculates revenue, credits, debits, expense, payroll, non-sufficient-funds transactions, proceeds from lenders, payments to lenders and the use of alternative payment methods. The full data set can be viewed for each respective report via the downloadable results.
Q2 2024 Key Findings
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Point 1
Optimism and Growth. Small business owners remain optimistic with 91.5% anticipating moderate to significant growth over the next six months, slightly lower than the 93% reported in Q1.
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Point 2
Payment Dynamics. For small businesses, the percentage of revenue received by check decreased to 17%, while the acceptance of alternative and digital payment methods continues to grow. Survey results and cash flow data show small businesses must meet a range of consumers’ payment expectations.
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Point 3
Cash Flow Management and Access to Credit. Small businesses are becoming less reliant on traditional banks for capital. Nearly 75% of small businesses reported bypassing a traditional bank loan, seeking out alternative lenders as their primary funding option — up from 71.6% in Q1.
Optimism about business growth remains robust.
In Q2 of 2024, 91.5% of small businesses expressed optimism about moderate to significant growth over the next six months — consistent with broadly reported trends. While this is slightly lower than the 93% reported in Q1, it remains robust.
Future Growth Expectations
The most optimistic sectors include professional and technical services (95.4%), accommodation and food services (93.3%) and healthcare (92.5%), while the manufacturing sector displayed the least optimism with 83.3% still expecting growth.
Over the next six months, more than one third of small businesses (38.3%) plan to increase their number of employees, with professional and technical services leading the way at 50%. But it’s not just about adding headcount, it’s about finding the right talent. A notable 42% of small businesses listed hiring qualified staff as a top concern.
Median Revenue by Month
Historically, the revenue figures for the end-of-quarter month adjust up by 5% due to new loan applications providing retrospective data; the June 2024 revenue has been adjusted in the figure above accordingly.
Businesses report that they have not significantly raised prices in response to inflationary pressures. Loan applications processed through Ocrolus for a variety of lenders showed slightly lower median revenues, influenced by elements such as industry type and acquisition channel. This suggests that Q3 2024 may be a decision point for many businesses as they determine whether growth expectations are being met — particularly for those businesses with high seasonal revenues in Q4.
Payment modernization enhances cash flow.
The use of alternative and real-time payment methods continues to grow, reflecting small business efforts to meet a wider range of customer expectations while improving business cash flows. 61% of businesses reported accepting alternative and real-time payment methods in the Q2 customer survey, up from 55% in Q1 of 2024.
Applicant cash flow data also reflects this increase, with revenues coming from alternative and real-time payment methods increasing from 24% in Q2 of 2023 to 28% in Q2 of 2024. This shift indicates an increasing willingness of small business owners to meet customer preference for more flexible and convenient payment options.
While customers haven’t moved away from paying by check entirely, cash flow data shows a decrease in check payments as a percentage of revenue, falling from 20% in Q2 of 2023 to 17% in Q2 of 2024. This suggests that businesses continue to shift to meet a wide range of customer expectations when it comes to payment type.
Growth of Alternative Payment Methods
Cash flow data shows a 10% increase in alternative and real-time payments from Q1 to Q2 of 2024, and a 14% increase when comparing June 2023 to June 2024.
Survey results show the percentage of small businesses accepting alternative payment methods are up 12% from Q1 of 2024.
Cash flow management and access to credit.
Effective cash flow management remains a priority for small businesses. In Q2 of 2024, 71% of businesses reported having enough cash to cover at least one or more months of operating expenses, similar to Q1’s 70%. The reliance on business lines of credit (LOC) has increased, with 61% of businesses using this tool in Q2, up from 56% in Q1.
Access to credit continues to pose challenges for small business owners across sectors. The primary reason for not applying for bank funding is the hassle of paperwork, cited by 50% of respondents. Among those who did apply (25%), one-third were denied, highlighting ongoing difficulties in securing loans from traditional banks. This is similar to the Q1 findings, where nearly 40% of businesses operating for over 20 years reported loan denials from big banks.
Regional Findings
Variations by region play a significant role in small business performance. Boston led the nation with a 14.25% year-over-year increase in payroll as a ratio of revenue, while Philadelphia experienced the largest decrease at 5.18% year-over-year. No region reported significant decreases in the second quarter.
Payroll-to-Revenue Ratio
Year-over-year applicant cash flow data out of the Cleveland area saw the most significant increase in the revenue-to-expense ratio, rising on average by 1.3%, while the Boston area was mostly flat to slightly down by less than 1% on average. These regional differences reflect varied economic conditions and challenges faced by small businesses across the country.
Revenue-to-Expense Ratio
Methodology
OnDeck analyzed survey responses from 413 current customers, who completed the survey June 23 - 28, 2024. Please note: we have not verified this data or survey responses. It may contain errors or inaccuracies, and we make no representations or warranties as to its reliability, accuracy or applicability. Customers received an incentive for completing the survey.
Purpose
The index is designed to reflect the cash flow, financial health and liquidity of small businesses in the United States. Through tracking of this index made possible by the unique combination of data available to Ocrolus and OnDeck, it will be possible to understand the trends affecting small businesses, the economic environment in which they operate and their access to capital.
Data
Ocrolus receives data on hundreds of thousands of small businesses each month as part of their applications for credit. The data consists of transactional bank data in the form of bank statements or digital bank data feeds, generally comprising the most recent 3 - 6 months prior to the time of application. Ocrolus then uses its proprietary transaction tagging and analytical capabilities to generate a detailed set of cash flow attributes for each business, thereby facilitating a lender’s understanding of its financial health and ability to service additional debt. The index release is comprised of small business loan application data from the previous 13 months. Previous period figures often change slightly as new loan applications provide retrospective data.
Filtering/Exclusions
The data are filtered to include only applicants within the 50 U.S. states.
Calculations
For each small business, for each calendar month, Ocrolus calculates revenue, credits, debits, expense, payroll, non-sufficient-funds transactions, proceeds from lenders, payments to lenders and the use of alternative payment methods. The data set is summarized into the following time series data for the past 13 months:
- Median revenue
- Median expense
- Median credits and debits comparison
- Median revenue-to-expense ratio
- Median payroll outflow
- Payroll-to-revenue ratio
Q1 2024 Key Findings
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Point 1
Optimism and Growth. A large majority of small businesses continue to feel optimistic about business growth opportunities over the next 12 months, with 93% expecting moderate or significant growth, a slight uptick (1%) from Q4 2023.
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Point 2
Financial Performance. Consistent with seasonal trends, revenue has decreased from its peak in Q4 2023, offset by decreasing expenses, resulting in a slightly higher revenue-to-expense ratio. Businesses continue to invest in employees, resulting in the payroll-to-revenue ratio increasing slightly to 19.5% in Q1 2024.
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Point 3
Cash Flow Management. Businesses are managing cash flows through a variety of approaches, most commonly using a business line of credit (56.2% of businesses), while many also report delaying payment to themselves and family members until other bills have been paid (43.1%).
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Point 4
Access to Credit. Banks appear to be limiting their lending, with nearly 40% of small businesses that have been in operation for over 20 years reporting they were denied a loan from a big bank. The percentage of transactions moving through payment apps instead of traditional payment methods continues to increase, with 26% of businesses reporting inflows from Venmo, Zelle or CashApp, which is an all-time high for this report.
Small business owners continue to feel optimistic about business growth.
The latest report shows optimistic business owners operating in a complex small business landscape, with variations by region in the U.S. and industry. Overall, median revenue for small business has come down from Q4 in keeping with seasonal patterns.
Median Revenue by Month
93% of small business owners anticipate moderate or significant growth over the next year, compared to 92% in Q4 of 2023.
72% of small business owners report having cash on hand to cover up to two months of operating expenses.
Payroll as a percentage of revenue was 19.5% in Q1 2024 — a year-over-year increase from 18.5% in Q1 2023.
Payroll-to-Revenue Ratio
A closer look at the data reveals that immigrant-owned businesses expressed the highest levels of optimism, with 56% of these entrepreneurs expecting significant growth over the next 12 months. Minority-owned businesses also show a confident outlook, with 41% anticipating considerable growth within the same timeframe. This optimism isn't just confined to one area — it's geographically widespread. In particular, Dallas and Boston stand out, with 48% and 41% of their respective small business owners forecasting significant growth, positioning these cities as hotspots of entrepreneurial confidence.
Future Growth
Inflation continues to be the top concern for business owners, followed by maintaining cash flow.
Business owner optimism about future growth is tempered by concerns about having the cash flow needed to support growth due to seasonal trends, inflation impacts on costs and access to credit. Managing cash flows is a major part of operating a small business, and business owners report they have a set of tactics they use to ensure they can pay their bills and invest in growth. The number one tactic is a business line of credit. In addition to using lines of credit to supplement cash flows, small businesses report using tactics like delaying payments to family and friends, paying only the minimum required payments on credit cards or using personal lines of credit to fill timing gaps in cash flows.
Small businesses prioritize access to flexible credit to support growth.
Many small businesses encounter significant barriers when dealing with loans from traditional banks. Over 40% of businesses report using loans to supplement cash flow, but according to the latest report, over a third of small businesses (34%) who applied for a loan from a bank reported that the application process was too difficult. An equivalent proportion of respondents said it takes too long and others said they didn’t even try because of the low likelihood of approval.
High rejection rates from traditional banks continue to cause headaches, even for established businesses. Roughly 40% of businesses that have been operational for more than 20 years still face loan denials from banks. This high rejection rate persists regardless of the longevity and presumably the stability of the business, suggesting a disconnect between the needs of established small businesses and the lending practices from traditional banks.
The landscape of small business financing continues to evolve in the face of bank pull-backs, and a significant number of small business owners (34%) expressed a preference for non-bank alternative lenders, noting the speed, ease and flexible financing terms they provide. These attributes are especially valued in an environment where immediate financial solutions are often needed to capitalize on business opportunities or manage unexpected challenges.
34% of small business owners prefer alternative lenders for their speed, ease and flexible financing terms.
40% of businesses open for more than 20 years face loan denials from banks.
Examining Demographic Data
The small business landscape is diverse, reflecting the cultures and perspectives of communities across the country.
Many family-run small businesses serve as the backbone of this landscape, and the report shows these businesses aren’t just passion projects or built out of necessity — they’re also investments in the future. According to the report, nearly all (92%) of family-owned businesses are first-generation business owners, and a majority (58%) plan to pass the business on to a family member in the future.
92%
of family-owned businesses are first-generation business owners.
58%
plan to pass the business on to a family member in the future.
Small businesses tend to operate under modest revenues, with nearly all having annual revenues under $10M. Veteran-owned businesses also have an important presence and large impact in the small business landscape, as this group had the highest percentage (26%) of self-reported annual revenues between $1M and $10M.
- Nearly all small businesses had annual revenues under $10M.
- Veteran-owned businesses had the highest percentage (26%) of self-reported annual revenues between $1M and $10M.
Regional Findings
As noted, there are significant variances by region of the country in small business outlook and cash flow trends. In particular, Dallas and Boston small business owners are the most optimistic in the country, with 48% and 41% of their respective small business owners forecasting significant growth, positioning these cities as hotspots of entrepreneurial confidence.
In Boston, small business revenue in the first quarter rose by 3% (quarter-over-quarter) but was offset by a 1.62% increase in expenses, resulting in a slight (-0.29%) revenue-to-expense ratio decrease compared to Q4 2023. In Dallas, small business revenue dropped by 4.59%, with a similar expense decrease of 4.58%, 14.88% resulting in a slight revenue-to-expense ratio decrease (-0.32%).
Payroll-to-revenue ratio has risen the most in Boston (+15.26%) and fallen the most in Minneapolis (-18.94%).
Changes in payroll seem to have a big effect on how profitable small businesses are in different cities. In Kansas City, the ratio of revenue to expenses decreased the most, but in Minneapolis, it increased the most.
Revenue-to-Expense Ratio
Methodology
OnDeck analyzed survey responses from 422 current customers, who completed the survey March 21 - 31, 2024. Please note: we have not verified this data or survey responses, it may contain errors or inaccuracies, and we make no representations or warranties as to its reliability, accuracy or applicability. Customers received an incentive for completing the survey.
Purpose
The index is designed to reflect the cash flow, financial health and liquidity of small businesses in the United States. Through tracking of this index made possible by the unique combination of data available to Ocrolus and OnDeck, it will be possible to understand the trends affecting small businesses, the economic environment in which they operate and their access to capital.
Data
Ocrolus receives data on hundreds of thousands of small businesses each month as part of their applications for credit. The data consists of transactional bank data in the form of bank statements or digital bank data feeds, generally comprising the most recent 3 - 6 months prior to the time of application. Ocrolus then uses its proprietary transaction tagging and analytical capabilities to generate a detailed set of cash flow attributes for each business, thereby facilitating a lender’s understanding of its financial health and ability to service additional debt. Each index release is comprised of small business loan application data from the previous 12 months.
Filtering/Exclusions
The data are filtered to include only applicants within the 50 U.S. states.
Calculations
For each small business, for each calendar month, Ocrolus calculates revenue, credits, debits, expense, payroll, non-sufficient-funds transactions, proceeds from lenders, payments to lenders and the use of alternative payment methods. The above data set is summarized into the following time series data for the past 12 months:
- Median revenue time
- Median expense
- Median credits and debits comparison
- Median revenue-to-expense ratio
- Median payroll outflow
- Payroll-to-revenue ratio
Q4 2023 Key Findings
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Point 1
Most small businesses are feeling optimistic about growth in 2024 and their ability to expand over the next 12 months.
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Point 2
A steady increase in revenues supports this optimistic outlook for growth in 2024.
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Point 3
As inflation cools, businesses are looking to improve profitability and available cash as a way to support growth.
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Point 4
Hiring qualified staff remains a concern for over half of small businesses.
“OnDeck is focused on supporting small business growth with the working capital they need,” said Jim Granat, co-president of OnDeck, the small business lending company at Enova. “This cash flow trend report shows that businesses are poised for growth and they have a positive outlook for the future. As small business owners know — cash flow is a truth-teller of the financial health of a business.”
92%
of small businesses say they're hopeful and expect moderate or significant growth in 2024.
80%
of small business owners say inflationary pressures are still a concern, despite recent cooling.
Small businesses are feeling optimistic and anticipate growth, while managing working capital needs.
Nearly all small businesses are feeling positive about the future and expect their business will experience moderate or significant growth in the next year.
Growth expectations are generally consistent across the country, with 25% of businesses expecting significant growth over the next 12 months. In Boston, Minneapolis and St. Louis, growth expectations are more muted, averaging just 16%.
Loan application data shows 25% growth on average in median revenue over the past 18 months, supporting small businesses’ optimistic outlook.
Cash flow data found that along with increased revenue, average daily balances were increasing for small business loan applicants’ operating checking accounts, indicating businesses are aligning resources to support their optimism on growth.
Revenue
Despite cooling, inflation remains a concern.
While inflation has cooled in recent months, businesses continued to feel its impact on expenses in the last quarter of 2023. Business owners are focused on business margins and generating the cash flows needed to meet current obligations and manage growth. As a result, they must carefully consider operating expenses, hiring practices and expansion plans. This is especially important as small business owners closely manage cash flows and often rely on access to credit to bridge the gap between current expenses and future revenue.
Step 1
Inflation's impact on cash flow is slowing.
Small businesses are concerned about the trailing impact of inflation on their operating expenses, with margins starting to improve after having absorbed cost increases in many areas — supplies, transportation, equipment, and even utilities. To combat inflation, the Federal Reserve has aggressively increased interest rates, leading traditional lenders and banks to pull back on lending for small businesses. However, they have been able to turn to experienced specialty lenders to fill the gaps in the capital needs, as evidenced by application rates.
Working capital is perhaps the most important part of starting and expanding a business, as it supports paying the bills, hiring or expansions in offerings that can grow the business. Our survey shows that 70% of small businesses have less than four months of operating cash (they would like more), and the cash flow data shows that for most businesses, 90% of revenue is consumed by operating expenses (before interest, debt repayment and taxes).
Expenses consume more than 90% of revenue for small businesses.
70% of small businesses have less than four months of cash available to cover operating expenses and support future growth.
Revenue-to-Expense Ratio
Step 2
Hiring qualified staff continues to be a challenge.
Having qualified staff is a critical component of long-term growth. The strong labor market has led to employee shortages and higher salaries across a number of industries, causing a majority of small businesses to express concerns over their ability to hire and retain qualified employees.
Regional findings
Over 65% of small businesses in major metropolitan areas — including Boston, Chicago, Cleveland, Kansas City, Philadelphia and Minneapolis — were moderately, very or extremely concerned about hiring qualified staff.
Ocrolus findings
Ocrolus data shows total revenue spend on payroll steadily increased over the 18-month period.
Over half of small businesses expressed concern about being able to hire qualified staff.
Hiring qualified staff was most concerning (70%) for small businesses in the accommodations, food and construction industries.
Payroll-to-Revenue Ratio
Methodology
OnDeck analyzed survey responses from 499 current customers, who completed the survey Dec. 12 - 15, 2023. Please note, we have not verified this data or survey responses, it may contain errors or inaccuracies, and we make no representations or warranties as to its reliability, accuracy, or applicability. Customers received an incentive for completing the survey.
Purpose
The index is designed to reflect the cash flow, financial health and liquidity of small businesses in the United States. Through tracking of this index made possible by the unique combination of data available to Ocrolus and OnDeck, it will be possible to understand the trends affecting small businesses, the economic environment in which they operate and their access to capital.
Data
Ocrolus receives data on hundreds of thousands of small businesses each month as part of their applications for credit. The data consists of transactional bank data in the form of bank statements or digital bank data feeds, generally comprising the most recent 3 - 6 months prior to the time of application. Ocrolus then uses its proprietary transaction tagging and analytical capabilities to generate a detailed set of cash flow attributes for each business, thereby facilitating a lender’s understanding of its financial health and ability to service additional debt. Each index release will include data from the prior 18 months; the first index will cover July 2022 through December 2023 and comprise data from approximately 3 million small business applications.
Filtering/Exclusions
The data are filtered to include only applicants within the 50 U.S. states.
Calculations
For each small business, for each calendar month, Ocrolus calculates revenue, credits, debits, expense, payroll, non-sufficient-funds transactions, proceeds from lenders, payments to lenders and the use of alternative payment methods. The above data set is summarized into the following time series data for the past 18 months:
- Median revenue time
- Median expense
- Median credits and debits comparison
- Median revenue-to-expense ratio
- Median payroll outflow
- Payroll-to-revenue ratio
- Median bank balance
Disclaimer
The content in this report is for informational purposes only and should not be considered legal, accounting or tax advice. Any statements or information within this report are as of the date published and do not necessarily reflect the opinions of OnDeck, Ocrolus or any of their affiliates. The information in this report should not be relied upon as a substitute for independent research. OnDeck and Ocrolus do not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Readers should verify statements before relying on them.