Small Businesses: Coping With a Tight Credit Market

The ongoing tight credit environment continues to impede growth among small businesses. And with the threat of possible inflation and rising prices, available credit will be more and more difficult to secure.

Indeed a Small Business Credit Survey conducted by the Federal Reserve Bank of New York revealed that 49% of small businesses blame tight credit as a large factor in limiting growth.1 Among firms operating with a loss, 66% had difficulty getting credit, while 36% of profitable firms were concerned about obtaining credit.

But there is some light at the end of the tunnel. Using a little ingenuity and effort, there are several simple ways to help stretch those business dollars, according to a recent online Small Business Trends article, “5 Quick and Easy Tips to Boost Your Small Business Cash Flow.”2

Open an interest-bearing checking account.
If you keep your business funds in a checking account, upgrade to an interest-paying checking account. When you maintain the minimum balance, you’ll avoid paying any monthly fees or service charges.

While the interest you’ll earn on a daily basis will be negligible, you can earn a little more by directing most of your business funds to a bank savings or money market account, and transferring funds to the checking account as you need it.

Make the most from your credit.
You can save a good deal of money on a variety of business expenses by using a points and/or cash rewards loyalty credit card. Look for one that offers rewards you can use on a daily basis.

Pay bills when they are due, not too early.
While it’s certainly important to pay your bills in a timely manner, it’s not necessary to pay your bills earlier than required. Take advantage of any 30- to 60-day grace periods so you’ll have the money on hand to pay for any unexpected or emergency expenses. Also, set up electronic transfers from your checking account on the bill’s due date.

Go green.
By using paperless systems, you’ll be environmentally correct while saving considerably on postage and printing. Consider using electronic invoicing and direct deposit payments for your employees.

Speed up your collections.
Instead of sending out invoices at the end of each month, try invoicing upon delivery or completion, so you’ll get paid sooner versus later. Additionally, you can offer incentives like rewards or discounts to those who pay early.

So, hopefully, with a little extra cash and a little patience, your small business will be back on track to grow once the economy stabilizes.

This educational, third-party article is provided as a courtesy by Ted Donnelly, Agent, New York Life Insurance Company.

2Small Business Trends, “5 Quick and Easy Tips to Boost Your Small Business Cash Flow,” Megan Totka, August 8, 2013,


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