Lending Club Blog

Bridging the Small Business Cash Flow Gap

According to The Wall Street Journal, one of the ways the economic crisis is affecting small business owners is that many customers are slow to pay. Receiving payments days or weeks late can be catastrophic to small businesses, which typically have much smaller cash buffers than their larger counterparts. It isn’t only other small businesses that are paying late; often, large business customers pay their smaller suppliers last. The rationale cited in the article is that customers want to keep their largest suppliers the happiest and are most likely to be pressured to pay by suppliers with the resources to hassle them about late payments.

What’s a small business owner to do when customers are behind in their payments and credit at banks continues to be tight? Those with good credit continue to turn to Lending Club for affordable financing. By taking out a 36-month P2P loan, business owners can effectively bridge the cash flow gap. Loan proceeds can cover everything from payroll to accounts payable until customers finally make their payments.

While small business owners may feel helpless when large customers pay late, there are a few things that can be done. As diminishing cash flow becomes a higher priority, so too may applying pressure to the customer. Cashing checks as soon as they arrive is also critical, given the wave of bankruptcies of late. CNBC recently showed a check that a small business owner had returned for insufficient funds from one of its customers: Lehman Brothers. Negotiating penalties for late payment is also helpful, though that is best done when new accounts are created and small businesses may be leery of scaring away potential customers.

As is often the case, those least able to survive late payments are often the ones most likely to experience them. What might be a minor nuisance to a larger business could end the existence of a smaller one. Using a P2P loan from Lending Club could keep a small business afloat long enough to survive the current financial crisis.

Have your customers been slow to pay you lately? What impact has that had on your business?

Tuesday, December 23rd, 2008 at 6:40 am

Comments (0)

Recommended

Types of Loans 101

Growing Your Business By Using Capital

9 Reasons to Open an IRA

6 Reasons to Get a Personal Loan

See more
Lending Club Awards
  • Archives z

Recent Posts

Patrick Dunne: A Message to Investors

I wanted to take a moment to introduce myself… Read More »
September 29, 2016

Line of Credit vs. Loan

Lines of credit (LOCs) and small business term loans… Read More »
September 28, 2016

Types of Loans 101

There are many types of loans out there and… Read More »
September 16, 2016

Meet Patrick Dunne — Lending Club’s Chief Capital Officer

Patrick Dunne, Chief Capital Officer,… Read More »
September 8, 2016

Growing Your Business By Using Capital

Smart small business owners don’t wait to consider borrowing… Read More »
August 19, 2016

9 Reasons to Open an IRA

Retirement: a word that often comes with many connotations.… Read More »
August 5, 2016

6 Reasons to Get a Personal Loan

While it would be great if we all had enough… Read More »
July 29, 2016

Lending Club and the Marketplace Model

Some of our investors have observed the funding environment… Read More »
July 28, 2016

A Recap: Credit Strength on the Lending Club Platform

We are proud of our… Read More »
July 14, 2016

A Message to Investors from our President and Acting CEO

Today, our President and acting… Read More »
May 19, 2016

2014

We went public today!

Ringing the bell this morning at the New York… Read More »
December 11, 2014

New and Improved Statistics Page

We recently redesigned our Loan Statistics page to make… Read More »
November 13, 2014

Lending Club Honored with Economist Innovation Award

This month I was honored… Read More »
October 15, 2014

Welcome Vermont Investors!

Today, we’re thrilled to welcome residents of the state… Read More »
September 4, 2014

We filed to go public today

We filed a registration statement with the SEC today… Read More »
August 27, 2014

Our Billion Dollar Quarter

We’re excited to announce  that we’ve facilitated over $5… Read More »
July 8, 2014

Is Lending Club Available in My State?

Is Lending Club available in my state? That is… Read More »
July 7, 2014

Lending Club Joins Senator Cory Booker to Discuss Improving Access to Capital for Small Businesses

Read More »
June 20, 2014

Lending Club Named a CNBC Top 50 Disruptor for a Second Year

For the second year in… Read More »
June 17, 2014

PRIME is now Automated Investing

Lending Club is excited to announce that PRIME has… Read More »
May 14, 2014
View All w