Keeping enough cash available for daily expenses has become a real problem for almost every small business over the last few months.
A recent report from the Pepperdine University’s Graziadio School of Business and Management and Dun & Bradstreet indicates that most of the small and medium-sized businesses in the US had some sort of working capital challenges in the last three months than during the last five years.
Particularly, almost 66% of the small businesses that were surveyed said that they required business funding in the second quarter of 2017 because they required even more working capital.
It is the maximum percentage in the history of the study, which has been carried out since the year 2012. Additionally, the average number of small businesses that required assistance is up 22% from the same time a year ago.
Minority and women-owned businesses are experiencing the biggest problems managing their working capital.
Almost 70% of surveyed women-owned small businesses and 80% of the minority-owned businesses said that working capital challenges were the main reason for them to acquire capital over the last three months.
Getting timely paid for the product or service they are offering is causing the extreme pressure on small businesses’ working capital. The research showed that almost 22% of small businesses, those that have less than $5 million in revenue, have had their accounts receivables payments drop in recent months.
Simultaneously access to capital for small businesses has increased since the Great Recession; these small businesses are still experiencing the effects of being the last paid on the totem pole.
While it is good that traditional lenders and alternative lenders are lending at more accessible rates, the capital problems that businesses are experiencing are mostly coming from the slowed payments.
The hopeful side in the cash crisis small businesses are experiencing is that they’re having a less complicated time in getting access to the small business loans they require. The capital access to small businesses was up 6.4%. Almost, 37% of small businesses expect to try and get small business funding in the next six months, which was up nearly 33% from last year.
Federal interest rate hikes are one basic cause of concern for small businesses. The research revealed that 20% of small businesses believe the most recent rate hike will deter their ability to access to capital, with 17% believing the anticipated hikes in the future will upset their ability to tap into new markets.
What we are looking is that at the same time as small and medium-sized businesses are still able to get working capital, they are accurate about the possibility that interest rate hikes may also bring in closer margins and affect their ability to get business funding in the near future.
Small business owners can take care of a one-time rate hike; however the veracity that the government is recognizing the real opportunity of four additional increments in the next year, on top of three within the last seven months, is inflicting more uncertainty about future ability to expand.
Regardless of their concerns, many small business owners surveyed saw their sales growth throughout the last year.
The study determined that 49% of small businesses reported revenue increases in the past year, with 22% business owners reporting their sales are the same. Just 29% noticed decline in the revenue. And this study was actually based on 1,167 small businesses from different industries.