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65% of SMBs face lending APR of over 8%

A global survey by C2FO of more than 6,700 leaders of small to mid-sized businesses (SMBs) found surprising alignment in terms of access to liquidity, the cost of borrowing, and their outlooks for the future. 

Shared concerns about uncertainty

In C2FO's 2016 and 2017 Working Capital Surveys, businesses had a wide range of concerns, including everything from Brexit to inflation to the strength of the US dollar.

In contrast, most respondents worldwide who took the 2021 survey were aligned on two key challenges: economic instability and worries about future customer orders. These concerns were likely fuelled by the economic crisis that followed the COVID-19 pandemic.

In addition, 31% of respondents are troubled by difficult relationships with customers and suppliers, 23% are worried about late payments, and 15% are concerned about the inability to secure funding.

Rising cost of liquidity

An average of 87% of respondents said they have enough liquidity for the next six months. The vast majority of survey respondents said they do not lack options in securing liquidity. They cited a wide range of funding sources, including revolving lines of credit, asset-backed loans, factoring, government support and supply chain finance.

However, the average percentage of borrowing from small to mid-sized businesses (SMBs) in the 2021 survey was down significantly from previous years. In the Working Capital Survey from 2017, the average uptake of funding sources was 46%. For the 2021 survey, it was only 23%. Part of that trend may be due to SMBs not pursuing as many funding sources available to them beyond traditional sources. Over the past year, government programmes worldwide have injected a significant amount of liquidity into the economic system, much of it directed toward SMBs. While the need for cash has increased in light of the pandemic, that demand has been concentrated among fewer funding sources, including the new government lending facilities.

In addition to this, the cost of liquidity continues to rise. Nearly two-thirds of respondents (65%) said they pay an APR of more than 8% on their borrowing. In the US, the percentage of respondents who pay less than 8% for liquidity has steadily declined, from 47% in our 2016 survey to 34% in the 2021 survey.

Reliance on government programmes

Government support played a big role in helping businesses endure the pandemic, as 42% of worldwide survey respondents confirmed they received or had applied for funding from government programmes, including loans, tax breaks and money to pay workers. That percentage was even greater in countries like China, India and Turkey.

Extended terms and late payments

Last year, in the face of a widening pandemic, government shutdowns and economic instability, the response of many companies was to hold on to as much cash as they possibly could.

That strategy was reflected in the number of respondents to C2FO's 2021 survey, who said more of their customers were paying late, and more of them had extended payment terms. An average of 37% of respondents said late payments from customers had increased in 2020. 

That percentage has ticked up from our 2016 and 2017 surveys in countries like the US, UK, China, India, France and Germany. In the US alone, the percentage of respondents who said their customers often paid late more than doubled, from 14% in 2016 to 33% in 2021.

An average of 28% of respondents worldwide said that at least a quarter of their clients had extended payment terms in the last year, likely due to the pandemic.

Reasons to be cheerful

Despite the challenges of 2020, overall optimism among respondents about their future business prospects was fairly strong - averaging 6.5 on a scale of one to 10. As noted earliet, the vast majority (87%) said they had enough capital to sustain their businesses for the next six months, which is at least some short term cause for optimism.


C2FO's 2021 Working Capital Survey was conducted in eight languages across 16 countries in December 2020 and January 2021. It consisted of 26 or more questions about topics like financial health, the cost of borrowing, support from government programs and more. The polling focussed entirely on businesses with between 10 and 500 employees.

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