Small Business Finance News
Small Business Suppliers Becoming Tighter With Credit
Written by Jenna Weiner
Suppliers are the latest source of credit to tighten lending to small business owners.
Banks are continuing to be cautious with all lending - especially to small businesses. But now many suppliers are also tightening the slack they sometimes show their customers, according to BusinessWeek.
The news source reports that many small business owners have asked their suppliers for additional time to pay their bills - in effect a small bridge loan - until their cash flows stabilize.
While suppliers are hesitant to say no, they are being increasingly more careful with which companies they negotiate with. Experts told the news source that over the last 18 months, suppliers have doubled their use of credit reporting tools to understand the credit risk of various customers. PredictiveMetrics said it has seen inquiries triple since 2007.
For customers who are already late on their payments, BusinessWeek reports that some suppliers have decided to reduce the amount of credit companies can carry - bad news for small business owners working on a large project.
Paying suppliers isn't just a problem faced by small business owners. Texas-based computer manufacturer Dell has told its suppliers that it will now take 65 days to pay its invoices instead of 50. In response, the Forum of Private Business has entered the company into its late payments Hall of Shame.
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