A new study conducted by MoneyThumb, a leader in automated document evaluation and fraud detection solutions, in partnership with deBanked, a leading publication for MCAs, reveals an alarming trend in the small business lending sector: fraud is not only on the rise but is significantly impacting the cost of doing business, especially for smaller funders operating in an increasingly uncertain economic environment.

As small businesses continue to grapple with supply chain pressures, shifting tariffs, and a volatile economic outlook, lenders are seeing a direct correlation between economic strain and elevated fraud risk. When margins are tight and working capital is harder to secure, the incentive for applicants to falsify documents, or even attempt synthetic identity fraud—increases. Most of this fraud cannot be detected visually, making traditional underwriting processes insufficient on their own. This hidden risk doesn't just weigh on the funder, it ultimately raises the cost of loans for all borrowers, including honest small business owners.

The survey polled a broad range of Merchant Cash Advance (MCA) providers, funders, and alternative lenders to assess how often they encounter tampered documents or fraudulent information during the application process. Respondents ranged from small firms processing fewer than 10 applications per month to large institutions handling over 500.