How 76% of Small Firms Bypassing Banks Reshapes MCA Underwriting Best Practices

The Non-Bank Funding Surge Is Here, and MCA Underwriting Must Keep Up

A striking new data point landed this quarter: 76% of small businesses planning growth in 2026 say they intend to bypass banks entirely when seeking capital. The figure comes from OnDeck's annual small business survey, which also found that 93% of respondents expect revenue growth this year. That combination of optimism and bank avoidance is channeling enormous deal flow toward MCA funders, revenue-based lenders, and alternative financing providers. For underwriting teams, the implications are immediate. MCA underwriting best practices built for lower volume and familiar borrower profiles are being stress-tested by a flood of first-time non-bank borrowers who present differently, document differently, and sometimes deceive differently.

This article breaks down why the bank-bypass trend is accelerating, what it means for verification workflows, and how funders can retool their underwriting operations to capture this demand without drowning in risk.

Why Small Businesses Are Skipping Banks and What That Means for Funders

The Speed and Access Gap

The reasons small businesses avoid banks are well documented but worth restating because they shape who shows up in an MCA funder's pipeline. Traditional bank lending timelines, often stretching four to eight weeks from application to funding, simply do not match the cadence of a small business that needs capital to stock inventory next week or cover payroll on Friday. The Federal Reserve's Small Business Lending Survey has consistently shown that approval rates at large banks hover around 14% for businesses under $1 million in revenue. For a restaurant owner or e-commerce operator with thin margins and seasonal swings, the math pushes them toward alternative providers that fund in days, not months.

What is new in 2026 is the scale. When three out of four growth-minded businesses default to non-bank funding, funders are no longer picking from a curated pool of bank rejects. They are underwriting the broad market. That includes well-run businesses with clean books, but it also includes first-time borrowers with messy documentation, businesses that have already stacked multiple advances, and in some cases, applicants presenting fabricated financials.

Volume Pressure on Verification Teams

Higher deal flow is good for revenue. It is brutal on verification workflows that depend on scheduling live calls. Consider the arithmetic. If a funder processed 200 verifications per month last year and deal flow increases 40% (roughly matching the origination growth that Enova reported in Q1), the same team must now handle 280 verifications. Each live call requires scheduling across time zones, walking the applicant through their banking portal, and documenting every transaction reviewed. A single call can consume 20 to 45 minutes of an underwriter's day. Multiply that by 80 additional calls per month and you need at least one more full-time employee just to keep pace.

Hiring is one option. But adding headcount does not reduce the scheduling friction that sits at the center of the problem. Every call still requires two people to be available at the same time, which means cancellations, reschedules, and deals that sit in limbo while the applicant takes another offer from a faster competitor.

Fraud Risk Compounds at Scale

Volume does not just strain capacity. It degrades quality. When underwriters are rushing through back-to-back verification calls, they spend less time scrutinizing each one. That is exactly the environment where manipulated bank statements, synthetic identities, and stacking fraud thrive. As we covered in our analysis of auto lending fraud tactics migrating to MCA, the playbooks that sophisticated fraud rings use are getting more portable across lending verticals. A funder processing 280 verifications a month with a team built for 200 is almost certainly missing signals that a less pressured workflow would catch.

The core tension is clear: the market is rewarding speed, but speed without rigor is a recipe for losses.

How Funders Can Modernize Verification Without Sacrificing Rigor

The Async Verification Model

The most effective way to decouple volume from headcount is to remove scheduling from the verification process entirely. Asynchronous bank verification accomplishes this by shifting the recording burden to the applicant. Instead of coordinating a live call, the underwriter sends a secure link with custom instructions specifying what the applicant needs to show: account summaries, specific date ranges, transaction details, deposit patterns. The applicant opens the link, records their live banking session directly in the browser with no software to install, and submits. The underwriter reviews the recording whenever they have capacity.

This model eliminates the single biggest bottleneck in traditional verification: the requirement for two people to be online at the same time. It also creates a permanent, timestamped artifact of the verification session, which is something a live call rarely produces with the same fidelity.

AI-Guided Recording for Consistency

One legitimate concern about async verification is quality control. If the applicant is recording on their own, how do you ensure they show everything you need? This is where AI-guided workflows make a material difference. Exact Balance uses a floating coach overlay during the recording session that walks the applicant through each required step and verifies completion in real time. If the applicant skips the three-month transaction history or fails to scroll through the full statement period, the system flags it before submission.

This is not generic AI hype. The underlying mechanism is AI vision that analyzes the screen content during recording, detects which banking portal elements are visible, and matches them against the funder's predefined checklist. The result is that recordings arrive complete and reviewable on the first attempt far more often than they would with unguided self-service.

Built-In Audit Trail for Regulators

The compliance dimension of this shift matters more than funders sometimes acknowledge. With the CFPB's final Section 1071 rules now excluding MCAs from small business data collection requirements, some funders may feel less regulatory pressure. But as we explored in our piece on how audit season exposes documentation gaps, the absence of federal reporting mandates does not eliminate the need for defensible verification records. State-level regulators in Virginia, California, and New York continue to tighten disclosure and documentation standards. Institutional capital partners increasingly require audit-ready verification artifacts before deploying funds.

Every Exact Balance recording is encrypted, uploaded to secure cloud storage, and tagged with a full activity log showing when the link was opened, when the recording started, and when it was submitted. That level of documentation is difficult to replicate with handwritten notes from a live phone call.

What This Looks Like in Practice

Consider a mid-size Canadian MCA funder processing 300 deals per month. Their underwriting team of four spends roughly 35% of each day on verification calls and related scheduling. When deal flow spikes by 50% over two quarters, driven by the same bank-bypass trend the survey data describes, the team faces a choice: hire two more underwriters at $60,000 to $75,000 each, or restructure the workflow.

With async verification, those 450 monthly verifications become a queue of recordings that underwriters can review in focused blocks. No scheduling. No time zone juggling. No rescheduled calls that push funding decisions back by days. The same four-person team can realistically handle the increased volume because they have reclaimed the 35% of their day that scheduling consumed. They review recordings at 1.5x speed when the session is straightforward, and they slow down and scrutinize frame by frame when something looks off.

The fraud detection benefit compounds over time as well. When every verification produces a video recording rather than a set of notes, patterns become visible across deals. An underwriter who notices the same browser configuration, the same transaction formatting anomaly, or the same suspiciously clean deposit pattern across multiple applicants can flag a potential fraud ring. That kind of cross-deal pattern recognition is nearly impossible when verification happens verbally and is documented inconsistently.

Speed to funding improves too. Because the applicant can record at 11 PM after closing their shop rather than waiting for a 2 PM call slot three days from now, the time from application to verified recording shrinks dramatically. Funders who compete for the same deals Enova and other large originators are chasing understand that every hour of delay is a chance for the merchant to accept another offer.

Frequently Asked Questions

What are MCA underwriting best practices for high-volume funders?

Best practices for high-volume MCA underwriting center on scalable verification, consistent documentation, and fraud-resistant workflows. Funders should implement asynchronous bank verification to eliminate scheduling bottlenecks, use AI-guided recording tools to ensure applicants provide complete banking data on the first attempt, and maintain timestamped audit trails for every verification session. Standardizing the verification checklist across all deals, rather than relying on individual underwriter judgment during live calls, reduces variance and catches more anomalies.

How does async bank verification work for MCA lending?

Async bank verification replaces live phone calls with browser-based screen recordings. The funder creates a verification request specifying what the applicant needs to show, such as three months of transaction history or a current account summary. The applicant receives a secure email link, opens it on any device, and records their live banking portal session directly in the browser without installing software. The recording is encrypted and uploaded automatically. The underwriter reviews it on their own schedule, checks the activity log, and marks the verification as complete. Exact Balance handles this entire flow with AI-guided prompts that ensure completeness during recording.

Does the trend of businesses bypassing banks increase MCA fraud risk?

Yes, the shift increases fraud exposure in two ways. First, a larger and more diverse applicant pool includes more first-time borrowers whose documentation habits are inconsistent, making it harder to distinguish honest disorganization from deliberate manipulation. Second, higher deal volume pressures underwriting teams to move faster, which reduces the scrutiny applied to each deal. Funders should respond by adopting verification methods that produce reviewable, permanent records rather than relying on the real-time judgment of an overworked underwriter during a rushed phone call.

Why do MCA lenders need AI-guided verification tools?

AI-guided verification tools solve the quality control problem that comes with self-service recording. Without guidance, applicants frequently omit required screens, record the wrong date range, or submit incomplete sessions that require follow-up. AI vision technology can analyze what is displayed on screen during recording, compare it against the funder's requirements in real time, and prompt the applicant to correct omissions before submitting. This reduces rework rates, speeds up the review cycle, and produces more reliable verification artifacts for compliance and audit purposes.

Conclusion

The 76% bank-bypass figure is not a blip. It reflects a structural shift in how small businesses seek capital, and it is pushing MCA deal volume to levels that manual verification workflows were never designed to handle. Funders who adapt their underwriting best practices to match this reality will fund faster, detect fraud more reliably, and scale without proportionally growing headcount. Those who do not will watch deals slip to competitors who figured it out first.

Exact Balance was built for exactly this moment. Async, AI-guided bank verification that lets your applicants record on their time and your team review on demand. No scheduling. No software installs. Full audit trail. Visit exactbalance.ca to see how it fits into your underwriting workflow.