Small- to Medium-Sized Businesses Struggle at Third Quarter’s End


Owning and operating a small- to medium-sized business (SMB) comes with its fair share of struggles. Just as one issue is put to bed, another rises up to take its place, often requiring the full attention of the SMB’s accounts receivable and accounts payable departments. As 2019’s third quarter closes, experts are saying some of the most impactful challenges to U.S. SMBs may not only continue in the final quarter, but also show signs of carrying over into 2020.

No. 1: Tough to Get Credit

In September, Pepperdine University’s Graziadio School of Business and Management and Dun & Bradstreet released results for their quarterly survey of SMBs, which saw SMBs having increased difficultly obtaining credit. While the second quarter’s survey showed 56% of respondents struggling for debt financing, recent findings revealed 59% of the 752 respondents had a tough time with financing in the third quarter. The survey also analyzed small businesses separately from midsize businesses, both of which were less successful in obtaining bank loans.

“Twenty-eight percent of small businesses reported success in getting bank loans during the previous three months, down from 31.6% in the second quarter. Midsize companies also had a tougher time, with 75% reporting they could get bank loans, down from nearly 90%,” The Boston Herald reported. “Businesses had more trouble getting bank loans, a sign that financial institutions may be getting cautious amid an economy that has weakened since the start of the year.”

The study suggested banks’ hesitance to lend may be attributed to SMBs low revenue expectations. Despite quarter one and quarter two predictions of revenue gains by 7.5% and 7.3%, respectively, expectations fell shy of 7%.

No. 2: Politics Increase Costs of Business

Since the start of the U.S.-China trade war in early 2018 under the Trump administration, tariff implementation has weighed heavily on U.S. businesses, most recently, “the financial hit U.S. small businesses are suffering as a result of unraveling supply chains,” CNBC reported earlier this month. Out of more than 1,700 small-business owners surveyed by online business-for-sale marketplace BizBuySell, more than one-third said the tariffs are increasing costs of business and 46% admitted to customer loss.

With no end in sight, some small businesses are assessing their options, including 64% saying they would raise prices and 65% saying they would find suppliers elsewhere. CEO Brad Howard, of premier marketplace retailer Trend Nation, told CNBC his company’s costs rose from $800,000 to $1.6 million because of the tariffs. To combat growing costs, the company’s director of product development and global sourcing Joe Haddock added Trend Nation is adopting a “cost-reduction strategy.”

“We have to tell our factory partners that they’re sharing the burden of this with us,” Haddock told CNBC. “We can’t swallow this alone; we’re not able to do that.”

This article first appeared in NACM's eNews

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