Traditional financial safety nets have weakened in recent years. Many Americans now face greater exposure to unexpected expenses as income streams, access to credit, and healthcare affordability become less stable. As a result, nonbank solutions have emerged as a common fallback for short-term financial needs.
This shift reflects how consumers are adapting to a more volatile economic environment. Rapid, flexible, and low-barrier borrowing options have become increasingly appealing as financial pressures intensify. Below, we examine the major trends that explain why Americans are turning to alternative loans for emergency expenses.
Fintech Pushes Borrowing Barriers Lower
Around 30–35% of US fintech companies operate lending businesses that rely on low-barrier approval models. They often require little to no formal credit check, rely on alternative data sources, and approve users within seconds. This streamlined process makes borrowing feel simpler, faster, more accessible, and more inclusive for borrowers who are often excluded from traditional credit.
One popular alternative solution is online personal loans. Instead of relying solely on credit profiles, these lenders tend to focus on overall financial capability, making approval more accessible to a wider range of borrowers. They’re also more flexible than payday loans like ace cash express, with clearer repayment terms and more manageable monthly payments.
Tighter Bank Credit and Higher Denial Rates
Another key reason Americans increasingly turn to alternative nonbank sources is the tightening of lending criteria among traditional lenders. According to a 2024 analysis, lending standards began tightening as early as mid-2022. By 2023, the level of tightening was comparable to stress periods like the 2008 financial crisis or the COVID-19 downturn.
Banks now require stricter collateral, higher credit scores, thorough credit history reviews, and debt-to-income checks. This limits access to traditional credit, especially for those with lower incomes, spotty credit, or minimal collateral. As a result, many borrowers are effectively shut out from banks, which helps explain the growing shift toward alternative, nonbank lending.
Rising Costs and Squeezed Budgets
Over the last few years, American paychecks have not kept up with inflation. Bankrate’s analysis shows that since early 2021, prices have risen 22.7%, while wages have only grown 21.5%, leaving real wages down about 1.2 percentage points. In other words, even with higher paychecks, Americans are effectively earning less once inflation is taken into account.
With essentials like rent, utilities, groceries, and fuel much more expensive and purchasing power continuing to decline, households have less extra cash, so when an unexpected bill appears, they lack funds. This cost-of-living squeeze drives Americans toward alternative lenders simply because they offer immediate solutions when bills exceed earnings.
Job Instability and Income Volatility
Many Americans now work in gig, hourly, contract, or part-time roles, which often feature irregular hours and unpredictable pay cycles. Even full-time workers can face reduced overtime, shift changes, or delayed pay. These fluctuations make it harder to match income with household bills, creating monthly cash flow gaps.
This has fueled explosive growth in earned wage access (EWA) and cash-advance apps. Instead of waiting for payday, workers can get near-instant access to wages for a fee or a small percentage tip. With such convenience, EWA transactions jumped by nearly 90%. In 2022 alone, Americans took 7 million+ EWA advances, totalling about $22 billion.
Soaring Healthcare Expenses
Medical expenses remain one of the top sources of financial shock. As of 2024, the average price of a one-night hospital stay in the United States is estimated at US $3,025. With this amount, a recent analysis found that a worker earning an average US wage would need to work roughly 384 hours to cover the cost of a typical hospital stay.
A Gallup/West Health survey found that 31 million Americans borrowed money for healthcare in the past year, totalling roughly $74 billion in medical debt. Among those who borrowed, 58% reported borrowing US$500 or more. This steep medical debt burden is a key reason Americans increasingly seek high-speed alternatives when a health bill arrives.
Regulatory and Market Shifts
Finally, changes in policy and the market have influenced loan availability. Over the past two years, regulators have alternately tightened and relaxed rules on alternative credit. For example, in 2024, the CFPB attempted to apply credit card protections to BNPL (treating pay-in-four loans as credit cards), but the new administration rescinded that rule in mid-2025.
In August 2025, the Trump administration issued an executive order directing regulators to prevent the “debanking” of lawful businesses. The order specifically addresses practices that limit payday lenders and emphasizes ensuring access to financial services. This fluid regulatory environment means nonbank loans face fewer uniform constraints than traditional credit, indirectly encouraging borrowers to use them.
A Shift Toward Faster, Flexible Borrowing
Fintech lenders now dominate the emergency-lending space with fast, low-barrier credit options. They have become widely used as tightened bank standards, rising living costs, unstable incomes, and escalating medical expenses push more borrowers toward nonbank solutions. Regulatory shifts have also created an environment where these products are increasingly accessible and broadly adopted.
Looking ahead, reliance on alternative lenders is likely to grow as economic volatility persists and digital credit tools become even more embedded in everyday financial life. Without meaningful improvements in wages, savings, or traditional credit access, these nonbank options may become a permanent fixture in the financial coping strategies of American households.
