Companies Seek Additional Financing in Pursuit of Long-term Growth
NEW YORK–(BUSINESS WIRE)–Small businesses and middle market companies in the U.S. are in growth
mode, according to the American Express Business Growth Pulse. The
survey found that ninety-two percent of middle market firms ($10M -$1B
in revenues) and eighty percent of small businesses (with less than 100
employees and at least $250,000 in revenue) say growth is the top
priority for their firms. A greater number of middle market companies
anticipate their businesses to grow in the next quarter, with more than
one-in-five of these firms (22% vs. 7% of small businesses) saying they
expect their companies will be “expanding by leaps and bounds.”
However, the road to growth is not free from obstacles. Challenges exist
regardless of business size and vary accordingly. Although the biggest
hurdle to growth is acquiring new customers for small businesses (22%),
middle market companies’ biggest challenges encompass issues that are
outside their control, including managing the rising costs of doing
business and increasing competition (each, 14%).
“Although small businesses and middle market companies are both focusing
on growth, they are taking different paths to expansion,” said Susan
Sobbott, president, American Express Global Commercial Payments. “Small
enterprises will look to grow by acquiring new customers while middle
market companies will look to expand by both acquiring new customers as
well as making infrastructure and equipment investments in their
While acquiring new customers presents a challenge to growth for many,
small businesses view this action as their primary path to growth (39%).
Middle market companies however are saying that both acquiring new
customers and increasing investments in infrastructure and equipment
would most help them grow (each, 15%).
Cash Flow Proves a Challenge; Middle Market Concerns Linked to Growth
Cash flow issues present another obstacle as businesses manage their
day-to-day operations and strive for long term growth. Cash flow
concerns are higher among middle market companies (65%) than small
businesses (49%), with one-in-five middle market companies (20%) saying
they are ‘very concerned’ (versus 8% of small businesses).
Middle Market Companies:
Over the last quarter, nearly half of middle market companies (46%)
say they experienced a cash flow crunch and nearly three-in-ten (28%)
attribute their cash flow issues to investments in the business.
Looking ahead, nearly four-in-ten (39%) middle market companies expect
the ability to invest in long-term growth to be their greatest cash
flow concern next quarter.
Small business cash flow concerns are more likely to be related to
day-to-day management of the business rather than plans for growth.
Looking back several months, more than one-quarter of small businesses
(27%) say they experienced a cash flow crunch. They attribute their
cash flow issues in the previous quarter to an unexpected decrease in
Further, small businesses (25%) expect collecting accounts receivable
to be the biggest cash flow worry next quarter.
When they experience a cash shortage, the primary method middle market
businesses (23%) will use to obtain funds is to take out a business line
of credit. Small businesses will dip into cash reserves (23%).
Long Term Growth Drives Financing Hunt; Middle Market Most Likely to
Growth is the main driver behind business’s quest for financing.
According to the survey, the main reason small and middle market
businesses would consider securing additional financing for their
companies is in order to pursue a long term growth plan (31%). The top
three reasons to seek additional financing vary by size of the business:
Small businesses say they would consider seeking additional financing in
Pursue a long term growth plan (26%)
- Get through short-term seasonal swings/business downturns (20%)
- Take advantage of a short term growth opportunity (19%)
Middle market firms’ reasons for considering additional financing
include being able to:
Pursue a long term growth plan (41%)
- Take advantage of a short term growth opportunity (33%)
- Invest in marketing, advertising or PR (33%)
- Hire new employees (33%)
Offer a new line of products or services (33%)
- Make capital investments the company has been putting off (32%)
Significantly more middle market companies (60%) compared to small
businesses (25%) anticipate the need to pursue financing in the next 12
When evaluating different business financing options, the most important
decision-making factor for small businesses (74%) is the rates/fees
charged. Middle market businesses say the most important decision-making
factor when evaluating business financing options is ensuring that their
data is protected against security breaches (61%), followed closely by
full disclosure of loan details and rates/fees (60%).
The American Express Business Growth Pulse is the first in a series of
surveys examining topics related to business growth for both small
businesses and middle market companies. The study is based on a
nationally representative sample of 1,000 U.S. small business
owners/managers, defined for the purposes of this survey as companies
with fewer than 100 employees and annual revenues of $250,000 or
greater, and 501 middle market companies, defined for the purposes of
this survey as companies ranging in size from $10 million to $1 billion
in annual revenues. The anonymous survey was conducted online among
financial decision makers, owners and managers by Teneo Strategy May
18-27, 2016. The poll has a margin of error of +/- 2.6% at the 95% level
of confidence for the total combined sample of 1501, a margin of error
of +/- 3.1% at the 95% level of confidence for the small business sample
of 1000 and a margin of error of +/- 4.4% at the 95% level of confidence
for the sample of 501 middle market companies.
About American Express Global Commercial Payments
Through its Global Commercial Payments division, American Express offers
a suite of payment and lending products that help businesses and
organizations of all sizes gain financial savings, control and
efficiency. Global Commercial Payments provides solutions for travel and
everyday business spending, cross border payments, global currency
solutions, and business financing.
To learn more about Global Commercial Payments visit business.americanexpress.com.
To learn more about American Express OPEN, which provides products and
services for small businesses and entrepreneurs in the United States,