Smaller Funders Are Facing Higher Fraud Rates; Document Falsification Emerges as Top Concern
San Diego, Calif. (September 16, 2025) – 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.
Key findings include:
- Nearly 54% of respondents report that 2–10% of the applications they receive contain fraud.
- Nearly 60% are “very concerned” about fraud.
- A staggering 90% cite document falsification or forgery as the most pressing issue.
- More than half of respondents say fraud has increased year over year.
- Smaller funders are disproportionately affected: funders processing fewer than 100 financial applications per month report fraud in 11.8% of applications—more than double the rate reported by larger funders (5.6%).
- 88% of funders are still reviewing documents manually, which wastes countless hours per month, is prone to human error and increases labor costs.
“Fraud is evolving just as quickly as the economy is shifting,” said Ryan Campbell, CEO of MoneyThumb. “In a time when rising tariffs and inflationary pressure are already squeezing small businesses, fraudulent applications add another layer of risk that funders can’t afford to ignore.”
Sean Murray, Founder of deBanked, added: “Relying solely on manual review simply isn’t sustainable. The funders who embrace intelligent automation will not only reduce losses but also serve more businesses—faster and more fairly.”
Up to seven percent of revenue, billions of dollars and thousands of hours are lost every year due to fraudulent applications in the lending industry. MoneyThumb’s Thumbprint® patented technology leverages AI and advanced algorithms to identify subtle discrepancies and inconsistencies that can’t be seen manually. Over the last year, Thumbprint® has reviewed more than 10M statements and identified over 500,000 fraudulent or altered documents.
As macroeconomic uncertainty continues into Q4 2025, the report underscores the need for technology-driven solutions that can scale fraud detection without sacrificing underwriting speed or accuracy.
About MoneyThumb
MoneyThumb is an advanced automation software solution that streamlines the lending underwriting process by converting bank statements instantly into actionable data. By exponentially increasing efficiency, accuracy and the detection of fraud – MoneyThumb empowers lenders and accountants to make faster, more informed and accurate decisions. MoneyThumb is headquartered in Encinitas, California, and serves customers globally. For more information visit www.moneythumb.com.
About deBanked
deBanked is a leading publication covering non-bank finance, alternative lending, and fintech since 2010. It is a trusted source for insights, news, and trends in the MCA and small business lending space.
Media Contact:
- Tracy Rubin
- JCUTLER media group
- tracy@jcmg.com
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