How Retail Small Businesses Finance Survival in Uncertain Times

In this era of acute business uncertainty, small and mid-sized businesses (SMBs) are vulnerable. Nonetheless, looking into their financial strategies offers a fascinating glimpse into their resilience and adaptability to changing economic conditions and tariffs. This Data Book uncovers critical insights into how SMBs navigate financing, revealing their diverse approaches based on their circumstances and outlook.

• Seven Key Findings
• Methodology

Seven Key Findings

Cash crunch

Half of SMBs must rely on the money they get from day-to-day sales or already have in the bank to survive. This highlights the precarious financial position of a significant portion of the SMB landscape, leaving them vulnerable to fluctuations in revenue caused by a shifting business environment. Hotels, restaurants and entertainment businesses are particularly likely to depend on these immediate cash stockpiles.

Risky business

While business credit cards are the most common form of financing available to SMBs with access (64%), those worried about survival turn to riskier options. Businesses stating they are “slightly or not at all likely” to survive are more likely to have used personal credit cards (27%) within the last 12 months compared to those more confident. This suggests that necessity drives the adoption of less conventional financing when business viability is in question.

Safety net

Access to financing fuels confidence; SMBs with access to financing are more confident in their ability to navigate economic troubles. Moreover, those with both excess cash and access to financing are 23% more likely to be very confident in navigating potential supply chain disruptions, such as those due to tariffs. This underscores the crucial role of financial resources in fostering a sense of stability and preparedness.

Who needs it?

Despite some claiming they don’t require it, lack of financing often goes hand in hand with a lack of access; most SMB owners or leaders who claim they do not use financing because they did not need it also do not have access. Furthermore, high fees and interest rates are significant deterrents for those with access, particularly SMBs in small cities. This reveals a potential gap between perceived needs and actual financial constraints.

Older and wiser

Strategic financing use differs by business maturity; while older SMBs (20 years or more) are less likely to have access to financing, when they do, they are more likely to use it strategically (53%). By contrast, SMBs with less than five years in business are more likely to use financing mostly out of necessity (45%). This suggests a shift from reactive to proactive financial management as businesses mature.

Getting ahead

Revenue significantly impacts financing choices; SMBs with annual revenues of $1 million or more are more likely to use business credit cards (39.7%), while companies with lower revenues ($150,000 or less) are more likely to use personal credit cards (19%). Additionally, SMBs with declining revenues are 4.5 times more likely not to have access to cash than those with increasing revenues. This highlights how financial performance shapes financing options and availability.

Tariffs

Which industry a company is in dictates its response to economic pressures: The retail industry is the most likely to replace suppliers with domestic suppliers in response to tariffs, while hotels and restaurants are more inclined to negotiate with suppliers and use alternatives. Notably, professional services are the least likely to have a plan in response to tariffs. This illustrates the sector-specific strategies SMBs employ when facing external economic challenges.

Methodology

This data book utilizes findings from a survey conducted by PYMNTS Intelligence from Feb. 5, 2025, to Feb. 12, 2025, involving a final sample of 560 U.S. small and medium-sized businesses. The survey collected 2,611 total responses, with the final sample determined after excluding partial responses, those who declined confidentiality and those who failed quality filters. This data provides a snapshot of the financing landscape and growth strategies of SMBs across various sectors and revenue sizes.