How middle market businesses are navigating uncertainty:

Editor’s note: This content was first published in The Business Journals. You can read the full article here.

Economic volatility is no longer a temporary condition that middle market companies wait out. It’s now the permanent state in which they operate. Supply chain disruptions, fluctuating interest rates, labor shortages and shifting customer expectations are all putting sustained pressure on businesses built for more predictable conditions. 

Capital One’s Middle Market Strategic Investments Research examined how more than 1,000 financial decision-makers are responding. Here’s what separates the most resilient companies from the rest: 

Middle market leaders enter 2026 with notable confidence. 89% percent say they are well-positioned to navigate challenges and capitalize on opportunities. That optimism holds even against a backdrop of ongoing supply chain volatility, rate uncertainty and evolving labor dynamics.

“Resilience isn’t just about surviving a downturn; it’s about being positioned for growth as conditions improve,” said Neal Blinde, president of Commercial Banking for Capital One.

Capital and funding are often used interchangeably, but they serve different strategic functions. Capital, typically provided through private equity, strengthens a company’s long-term position. Funding, provided through banks or private credit, supports near-term liquidity needs.

More than half of businesses surveyed are actively pursuing or have already secured private equity (58%), and 50% have established credit through private financing. The most common intended use for that alternative financing is technology investment (68%)—highlighting how access to capital is directly enabling modernization priorities. 

The dynamic plays out differently across industries. Manufacturers are securing alternative suppliers and investing in automation, drawing on a blend of long-term growth capital and short-term funding to manage upfront costs while maintaining liquidity. Service-based businesses are prioritizing workforce flexibility and digital modernization, relying on diversified financing to support both. The common thread is proactive planning.

Over the past five years, middle market companies have adopted a more analytical approach to uncertainty. Management teams increasingly view technology, automation and AI not just as efficiency tools, but as core components of risk management. 49% of respondents are prioritizing cybersecurity and risk management investment, while 48% are directing capital toward sales and marketing—a balance that reflects both protection and growth orientation.

What connects the most resilient organizations is their use of data to understand vulnerabilities before they become critical. That means avoiding overly optimistic cash-flow projections, stress-testing financial models and accounting for macroeconomic variables like rising interest rates.

Blinde expects lending models to evolve accordingly over the next decade, with greater use of real-time data to assess creditworthiness and structure financing around cash flow patterns. 

“There is a significant opportunity for private credit partnerships to continue complementing traditional banking rather than replace it, especially as businesses look for diversified funding strategies to manage risk and support growth,” he said.

Leaders are balancing growth priorities—such as organic expansion (32%) and product innovation (24%)—with foundational investments in IT infrastructure (53%) and data and analytics (47%). Companies that build the capability to forecast and adapt are better positioned to move when others hesitate.

Blinde recommends that companies start by building strong financial reporting and forecasting capabilities. From there, they can diversify funding sources as balance sheet needs grow and build both flexibility and buffers to prepare for varied circumstances.

The role of the banking relationship is central to that preparation. Proactive engagement—not just reactive problem-solving—is what helps produce better outcomes when pressure arrives.

“Banking institutions can provide key insights into financial metrics to benchmark your level of financial resilience against industry standards and identify areas for improvement,” he said.

The middle market companies that perform best in volatile conditions aren’t the ones that react fastest—they’re the ones that already know where pressure will hit first, how much room they have to adapt and who they can call before options narrow. That comes from deliberate planning, disciplined forecasting and real partnership. In an environment where uncertainty is permanent, resilience isn’t about being ready for everything. It’s about being ready to make the right decisions when the margin for error is small.

 

Read more from Capital One’s Middle Market Strategic Investments Report.