Small business owners report that cash flow and costs are their top two challenges, and research shows that they have a harder time getting bank loans than larger businesses. Small, local banks are more likely than large banks to approve loans for small businesses.

Those are just a few of the conclusions highlighted by business mentor network SCORE, which recently gathered statistics that point out the financial difficulties and opportunities American small businesses face today.

small-business-cash-flowSmall business owners report these top challenges:

  • 22% say cash flow is their biggest challenge
  • 19% say it’s the costs of running their business
  • 13% say revenues/sales
  • 9% say credit availability

On average, small business daily income is only $7 above daily expenses. Average daily incomes include:

  • Personal services: $3 net income
  • Retail: $4 net income
  • Repair and maintenance: $6 net income
  • Professional services: $7 net income
  • Restaurants: $11 net income
  • Health care services: $21 net income

Small businesses struggle to obtain bank loans in comparison to larger companies:

  • 38% of businesses with revenue less than $5 million are approved for bank loans.
  • 70% of businesses with revenue between $5 and $100 million are approved for bank loans.

Common reasons for loan rejections include:

  • 25%: Quality of earnings and cash flow
  • 21%: Size of company
  • 19%: Insufficient operating history
  • 18%: Insufficient credit

Small banks are more likely than large banks to approve smaller companies:

  • 60% of businesses with revenue less than $100K are approved for loans from small banks, while only 33% of these businesses are approved by larger banks.
  • 69% of businesses with revenue between $100K and $1M are approved for loans from small banks, while only 49% of these businesses are approved by larger banks.
  • 88% of businesses with revenue between $1M and $10M are approved for loans from small banks, while only 72% of these businesses are approved by larger banks.