In this bad economic environment we have these days,having access to cash flow is the primary factor that makes the difference between those companies that were able to grow and gain market share against those who have experienced huge drops in Income.

economyThe reason that many small businesses have seen their sales and availability let drastically fall, many to the point of closing their doors, while many large American companies have managed to increase sales, opening new retail operations and grow profits by hand is a small business almost always depends exclusively on traditional commercial bank financing, such as SBA loans and unsecured credit limits, while the largest publicly traded companies have access to public markets, such as market or the bond market for access to the capital.

Before the beginning of the financial crises of 2008 and the Great Recession ensuing, many of the largest US commercial banks were engaged in a policy of easy money and openly lent to small businesses whose owners had good credit scores and industry experience. Many of these business loans were made up of unsecured trade credit limits and installment loans that required no collateral. A personal guarantee of the business owner almost always supported exclusively these loans. This is why good personal credit was all that was required virtually ensure approval of business loan.

During this period, thousands of small business owners have used these business loans and credit lines to access the capital they need to finance working capital needs which included payroll costs, purchases equipment, maintenance, repairs, marketing, tax obligations and opportunities for expansion. The easy access to these capital resources has allowed many small businesses to thrive and direct availability requirements when they occurred.

Therefore, many ambitious business owners have begun to develop their business operations and borrowed heavily small business loans and credit limits, with the anticipation of being able to repay the heavy debts of expenses by the future growth and increased profits. As long as banks kept this easy money ‘policy, asset values continued to rise, consumers have continued to spend and business owners have continued to expand through the use of ‘increased leverage. But, ultimately, this party would come to an abrupt end.
When the 2008 financial crisis began with the sudden collapse of Lehman Brothers, one of the oldest banking institutions and famous on Wall Street, financial panic and contagion spread throughout the credit markets. The ensuing freezing of credit markets has made the shift of the US financial system come to a grinding stop.