The latest Small Business Credit Survey from the Federal Reserve reveals that small business owners are turning to online lenders in record numbers. Forty percent applied to online providers in 2017, closing the gap between those that applied to large banks (49 percent) and small banks (47 percent). Not only did the total number of loan applications to online lenders increase in 2017, but satisfaction rates shot up almost 50 percent year-over-year. The bottom line? More and more business owners are comfortable finding financing online. Since the 2008 recession, online lending has become an increasingly important piece of the small business ecosystem. Tough economic times following the recession made it harder than ever for small business owners to find funding through traditional banks. Online lenders sought to fill that gap; however, studies revealed that many business owners were leary about going through the borrowing process in a virtual setting. Financing is a crucial component of small business growth, and the latest Fed report shows that entrepreneurs are warming up to online solutions. Small Business Owners Still Lack Credit Options The Fed reports that a third of small business owners had trouble with credit availability in 2017. Eighty-seven percent of small business owners relied on their own personal credit score to obtain business financing. Even when owners could get some access to capital through a traditional bank, 70 percent got less than they wanted after an arduous, weeks-long process. The need for cash flow seems constant, but traditional lending institutions have simply been unable or unwilling to meet small business owners’ needs. The Fed report defines small business as those that “have between 1–499 full or part-time employees.” These small firms make up 99.9 percent of all U.S. businesses, employ 47.8 percent of the U.S. workforce, and face a common set of issues when it comes to cash flow. According to the Fed report, 40 percent of small employer firms had trouble covering their operating expenses last year. Gaps included anything from stocking new inventory to paying employee wages. A New Way to Borrow Although it may seem counterintuitive, many small organizations face cash flow issues because they are successful. It can be hard for owners to keep up with the pace of their own growth, including the need for new equipment, more space, and more inventory. According to the Fed report, “applicants to online lenders report being attracted by the speed of credit decisions, improved funding chances, and lack of collateral requirements.” Small business owners are increasingly satisfied with their online borrowing experience as they discover financing options and opportunities for growth they never knew existed. “Nothing in a business causes more sleepless nights than wondering if you have enough cash for the next payroll. In our line of business, executive search, we typically don’t see a return on a hired employee for 3–6 months; having low interest funds has definitely helped bridge that gap. Now we can focus on building the business and bringing in more revenue,” said Brian Haugh, of Chicago Search Group. Because America’s small business revolutionaries are finding new, online allies in the fight to grow their businesses, optimism is running high. A whopping 66 percent of small firms anticipate revenue growth in 2018. This year’s Fed report could be an indicator that online lenders are lighting a spark with the potential to ignite the power of U.S. small business in a way we haven’t seen before.