The financial landscape for small businesses is shifting rapidly, presenting both challenges and opportunities. After some recent economic disruption, many businesses are now facing high demand for their products and services.
| “While this surge is promising, it also creates new hurdles: securing the capital needed to scale operations, hire staff, and meet customer demand. Inflation, supply chain constraints, and rising interest rates have added complexity, making access to financing more critical than ever,” said Credibly Founder Ryan Rosett. |
In this blog post, we’ll go over how small businesses performed in 2024, and explore potential changes in small business financing you can anticipate moving forward.
How small businesses performed in 2024
In 2024, small businesses navigated a landscape packed with hurdles—from integrating AI across multiple facets of business to concerns with the economy. Economic uncertainty loomed large, with 86% of business leaders citing it as a significant challenge.
Despite these obstacles, many small businesses found ways to thrive. A notable 68% of owners reported steady cash flow, reflecting resilience and adaptability in an unpredictable market.
Insights from Credibly
In our survey on small business performance in 2024, over half of the respondents noted that the economic state directly impacts their willingness to seek financing. However, experienced entrepreneurs chose to focus on long-term growth opportunities over short-term economic shifts through securing financing.
This balance between cautious decision-making and strategic optimism defines the small business outlook heading into 2025. The lessons from 2024 show that adaptability and a forward-thinking approach are essential for navigating the challenges ahead.
| Learn more about your financing options and how you can qualify for a loan: |
How small business financing is likely to change moving forward
Small businesses are gearing up for changes in the financing landscape, with new trends reshaping how they access capital. While some challenges are on the horizon, a proactive and flexible approach is key to seizing opportunities.
1. Economic adjustments
With inflation still above sustainable levels, the Federal Reserve is focused on bringing it down, even if that means short-term economic tightening. Experts suggest a potential recession may occur in the near term, but relief could follow swiftly.
The silver lining? Businesses that position themselves well now can be ready to thrive when rates stabilize and borrowing becomes more accessible.
Plus, current projections indicate that even with the potential of tariffs starting in 2025, with the U.S. outperforming other countries in economic performance.
2. More selective lending practices
Lenders are becoming more cautious, with both banks and nonbank lenders tightening their standards. While this means businesses will face more scrutiny, it also highlights the importance of presenting strong financials and clear plans for financing.
These restrictions are temporary. As economic uncertainties resolve, lenders are expected to become more aggressive in extending credit. For small businesses, this is a chance to refine revenue projections and demonstrate resilience to attract financing when it matters most.
3. Realistic planning leads the way
Smart financial planning is key to navigating evolving lending conditions. Businesses should focus on setting realistic revenue projections based on historical data and market trends.
By creating best-case, worst-case, and most-likely scenarios, businesses can prepare for a variety of outcomes. This approach not only supports better budgeting but also shows lenders that your business has a solid plan, increasing your chances of securing financing.
To build better financial planning habits, you could:
- Diversify revenue streams: Introduce complementary products or services. For example, a restaurant might sell branded sauces, or a gym might offer virtual classes.
- Maintain a reserve fund: Set aside 10–20% of monthly profits into a business savings account. Use a high-yield business savings account to earn interest on reserves.
- Be strategic with financing: Use lines of credit or short-term financing to cover seasonal gaps in cash flow, for example.
Be strategic with your business financing.Learn more about our right-fit financing and how we can help you achieve your goals. |
4. Faster lending decisions with AI
Artificial intelligence is transforming the lending landscape. By using AI-driven risk assessments, lenders can make faster decisions and offer approvals in hours rather than days.
While AI maintains efficiency, it requires businesses to prepare thoroughly. Key financial metrics must be optimized before applying since AI relies strictly on data, with little room for explanations. This means businesses need to focus on maintaining strong cash flow, creditworthiness, and consistent financial reporting.
5. Further use of alternative lending options
Crowdfunding, revenue-based financing, and peer-to-peer lending are providing fresh opportunities for small businesses. These alternatives often fill gaps left by traditional banks, especially for businesses seeking smaller loans or those with unique financial needs.
Fintech platforms have further accelerated this trend, allowing businesses to secure funding quickly without the red tape of conventional loans.
6. Fintech is taking the lead
Fintech lenders are making waves by leveraging technology to provide faster, more flexible financing options. Digital-only banks, free from costly brick-and-mortar infrastructure, deliver streamlined services that meet businesses where they are—online. These solutions level the playing field, giving businesses more control over their financial future.
With these expanded options, small businesses have never been better positioned to secure the funding they need to grow and thrive. By tapping into the right resources, you can find a loan that fits your goals and sets the stage for long-term success.
Navigating a shifting financial landscape requires more than just awareness—it demands action. As small businesses adapt to new trends and prepare for emerging opportunities, having the right partner in your corner can make all the difference.
