Half of Financially Stable Firms Use Financing to Fuel Growth

When uncertainty rises, so does nostalgia for the familiar. In the U.S. middle market, where firms straddle the line between enterprise scale and small business agility, that means borrowing the old-fashioned way.

Despite the efficiency of embedded lending, which is credit extended directly through digital platforms and enterprise tools, just 1 in 5 firms prefer it to traditional bank loans.

That gap says less about technology than temperament. The latest PYMNTS Intelligence report, “Lending in Uncertain Times: Strategic Shifts in U.S. Middle Market Financing,” part of the 2025 Certainty Project, shows that how a company borrows is now a proxy for how confident it feels about the economy itself.

The survey of 60 U.S. firms with annual revenues between $100 million and $1 billion finds financing decisions track closely with a company’s sense of operational stability. When the business climate feels predictable, companies treat credit as strategy. When it feels volatile, they treat it as a way to survive stormy seas.

Three data points stand out:

• Strategic financing doubles in stable conditions. Half of low-uncertainty firms use financing as a growth lever, compared with just 25% of those navigating high uncertainty. Stable firms borrow to fund inventory or expansion; anxious ones borrow to survive.
• Embedded lending remains niche. Only 20% of mid-market firms prefer embedded options, with adoption peaking at 32% among companies confident in their forecasts and falling to 7% among those facing volatility.
• Clarity still beats convenience. We found that 27% of high-uncertainty firms cite clear terms and familiar compliance as their top reason for sticking with banks. Even among stable companies, tradition wins for reasons of flexibility and trusted relationships.

Taken together, the data reveals that embedded finance’s biggest barrier isn’t technology or integration — it’s trust. Firms that have weathered tariffs, supply-chain shocks and rate swings now prize predictability over speed. For many, transparency and regulatory familiarity matter more than shaving days off an approval cycle.

Still, the seeds of change are visible. Companies that do embrace embedded lending cite speed and cash flow efficiency as the key motivators. About one-third of firms facing higher uncertainty would turn to embedded credit to secure faster approvals, while those with steadier operations favor it for the way it syncs financing with existing platforms. That divide suggests embedded lenders face a segmentation problem: cautious firms need reassurance; confident ones need integration.

The report frames the middle market as a bellwether for how credit will evolve beyond banks. Embedded lending has the potential to rewire how firms fund operations — but only if providers can close the transparency gap. PYMNTS Intelligence notes that embedded lenders must offer clear documentation, visible risk-sharing, and more responsive customer support to earn parity with traditional institutions.

For now, though, stability still shapes strategy. The more certain a company feels, the more likely it is to use credit to grow. The more uncertain, the more likely it is to cling to what it knows. And in 2025’s uneasy economy, that means the traditional bank loan remains the instrument of choice.

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