Here’s what companies without a lender did—and where they went when they finally did get a loan.
Nearly a third of U.S. employers with 1 to 499 workers had no unpaid debt at the time of the Federal Reserve’s survey last fall, compared with 21 percent percent in 2020. It’s not that the group doesn’t borrow. Eighty-six percent of employers agree that they use financing regularly. Yet at that point they came up with nothing to pay.
The figures come from the Federal Reserve Banks’ 2026 Report on Employer Firms, published March 3 from a convenience sample of 6,525 employers surveyed last fall. Here are some of the things those companies that closed that payroll/cash-flow gap without a lender did, and where they went when they finally did get a loan.
1. Customer cash is the first facility, and it closes faster than a line
A $250,000 credit line requires an underwriting cycle, a personal guarantee and two years of returns. A deposit clause is one paragraph that clears the day when the contract is signed.
Imagine a company that contracts $1.2 million in business a year. About $480,000 is moved a quarter of the way forward by a 40 percent deposit with milestone balances.
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Yoav Kutner, one of the co-founders and the CEO of Oro Inc., used a similar approach to build OroCommerce. After Magento was acquired, Kutner and his team received funding offers from tier-one VCs but chose to bootstrap instead, he says. They generated early cash flow through implementation, customization and integration services for Magento customers, reinvesting those earnings directly into product development and funding roughly four years of development before raising outside capital in 2016.
2. A 3 percent price increase and a credit line are not the same instrument
Take a company doing $600,000 of revenue: a 3 percent increase is $18,000 a year. Interest is charged on the average drawn balance, the amount actually spent, not the $250,000 limit. Carry $150,000 drawn at 11.5 percent and the line costs about $17,250 a year.
If the company increases its price for one year, that’s enough to cover one year of interest, and nothing else. What the price increase gives you is cash with no maturity and no guarantee.
Source: www.inc.com
