Small businesses struggle with cash flow

Northwestern Financial Review, Nov 1, 2001

Cash flow is a problem for more than two-thirds of American small businesses, according to a report by the National Federation of Independent Business Education Foundation and Wells Fargo Bank. Most companies with cash problems do not get a loan or draw down a line of credit but instead tap their own resources, the research shows.

About 20 percent of the companies turn to banks, credit unions, credit cards or family members for loans. Larger companies - having 20 to 249 employees - are more likely to get a loan than smaller companies. About 20 percent of the 750 business owners surveyed said cash asphyxiation is a "continuing" problem. Another 50 percent said insufficient cash flow is a "common" or "occasional" woe.