The Morality of Small Business To Be Tested Will Small Businesses Pay Their Bills

Let’s face it, the last several years small business has been tough! Especially if your business depends on other small businesses or consumer spending! The problems began as early as 2002 – 2005 when small business models no longer made sense. However, most owners were unaware of their risks because they were cash flowing. It was one of the issues in their business model, debt financing. The reasons the business was cash flowing was due to increases of debt rather than profitability. Even if profits were growing they were not out pacing debt increases.

Even as the economy slowed in later 2007 and 2008 the pain was not felt because financial institutions continued to increase credit card limits, line of credits and other debt service instruments. It was not until late 2008 and 2009 when financial institutions began changing their loan requirements. The stricter loan requirements disallowed renewals and called line of credits (many saw their line of credit turned into a term loan) and credit limits were reduced, not increased as usual. 2009 was not an emotionally fulfilling year for many. 2009 was a wake up and smell reality year.