Small businesses reveal cash flow as an overriding concern in a web-based survey from Boston-based Mercator Advisory Group’s regarding payment acceptance, B2B payments and banking services use and alternative lenders.
The research, “Business Credit Cards and B2B Payments: More Credit, Please,” conducted in spring 2017, U.S. small businesses (between $500 thousand and $5 million annual sales) is the second of three reports summarizing the results of the 2017 Small Business Payments and Banking Survey.
Three in four small businesses have delayed routine purchases at least once or twice a year because of cash flow management issues. This concern causes small businesses to use credit lines wherever they can, seeking more generous credit lines from business credit cards and loans from financial institutions, nonbanks, and alternative lenders.
Almost all of the respondents to the survey have some type of business account with a financial institution, including 8 in 10 who have a business credit or charge card. Less than half of them claim to pay their balance in full every month. Small businesses are less likely than consumers to pay their credit card bill in full every month.
Small businesses are hungry for credit and often supplement their business credit lines by using personal cards or funds, according to the report. However, it’s not always easy for small businesses to obtain the credit they need, when they need it, particularly newer companies that seek business credit lines of less than $100,000. This is due to traditional banks’ often restrictive lending policies.
Nevertheless, small businesses are overwhelmingly optimistic about their growth and profitability over the next year. More than 4 in 5 small businesses surveyed in 2017 expect their firms’ sales and profitability to increase over the next year. The 28 million U.S. small businesses have been a growth engine for the U.S. economy over the past decade, and Mercator Advisory Group’s survey results suggest that this growth will continue.
“Managing cash flow is a top concern for small businesses. Access to credit by borrowing on business credit cards and being able to obtain business loans to supplement existing credit lines are essential to keep the businesses afloat and invest in new products and services to keep them growing and profitable,” Karen Augustine, Mercator Advisory Group’s Senior Manager of Primary Data Services, the author of this report, noted.
In total, Mercator obtained over 1,600 qualified responses from decision makers at revenue-qualified small businesses in the U.S. that accept credit and/or debit cards for payment. The sample included a geographically dispersed quota of 450 responses from businesses with annual sales of $2-5 million and the remainder from businesses with annual sales of $500,000-$1.99 million.
