Nearly 21% of US SMBs could exhaust cash reserves within 6 months

By Gloria Methri

America’s small businesses, the backbone of the U.S. economy, may be facing a troubling cash flow crisis. Nearly a quarter of these businesses report having less than six months of cash reserves, putting them at risk of financial instability in a challenging economic landscape.

According to a survey from capital platform Stenn, nearly 21% of small to medium-sized businesses (SMBs) have just 1-5 months of financial cushion remaining.

The findings raise red flags for the nation’s largest employment sector, comprising 33.2 million small businesses that provide jobs to nearly 61.6 million people—or 45.9% of the total U.S. workforce.

The risks are heightened by the high rate of small business closures: 20% of new businesses fail within their first year, and almost half do not make it past five years. These statistics highlight the need for quick access to resources, particularly as 56.4% of survey respondents said they have only 6-18 months’ worth of cash reserves.

Beyond survival, SMBs are also striving to grow, with over 45% of respondents expecting to expand their operations in the next 6-18 months. Another 36.8% see themselves just months away from scaling but cite an urgent need for funding and financial resources. Access to growth capital, market insights, and operational investments in areas like marketing and inventory were identified as critical for fast-tracking this expansion.

“Small businesses are the unsung heroes of the U.S. economy,” said Noel Hillman, Chief Commercial Officer at Stenn. “With so many built on a founder’s ingenuity, traditional lenders often overlook their value. Stenn is committed to providing flexible financing to help small businesses manage cash flow, enter new markets, and streamline supply chains to stabilise and grow.”

For many of these businesses, the path to growth is obstructed by their immediate cash flow needs. Some 43.2% of respondents highlighted the importance of balancing short-term financial requirements with long-term growth objectives. In comparison, 42% pointed to the need for deeper market insights and customer data to guide strategic decisions. An additional 40.4% called for investments in new products and marketing as the key to unlocking the next stage of growth.

As economic headwinds continue, these findings underscore the critical need for more adaptable financing options to support the financial resilience of SMBs, enabling them to not only stay afloat but thrive in an increasingly competitive market.