51% of SMEs Struggle With Cash Flow [2026 Data]

51% of US small employer firms cited uneven cash flow as a financial challenge in the past 12 months, according to the Federal Reserve Banks’ 2025 Report on Employer Firms, drawn from the 2024 Small Business Credit Survey of more than 7,600 firms. That is the most rigorously sourced answer to how many SMEs struggle with cash flow, but it is not the only one: ask the question more broadly, as several 2025 industry surveys did, and the share climbs into the 80s. This report walks through both versions of the number, where each one comes from, and why the gap between them is itself useful information for any small business owner.

What percentage of small businesses struggle with cash flow?

51% of US small employer firms named uneven cash flow as one of their financial challenges over the past year, per the Federal Reserve Banks’ 2024 Small Business Credit Survey, which reached more than 7,600 small employer firms nationwide between September and November 2024. That places cash flow third on the survey’s list of financial challenges, behind rising costs of goods, services, or wages (75%) and paying operating expenses (56%).

Figure 1: 51% of US small employer firms cite uneven cash flow as a top financial challenge. Source: Federal Reserve Banks, 2025 Report on Employer Firms (2024 Small Business Credit Survey).

The ranking matters because it shows cash flow is rarely the root problem on its own. A firm dealing with rising supplier costs or a tight payroll budget is more likely to notice the cash flow symptom even when the underlying driver is something else entirely, which is part of why this single number undercounts how often cash flow actually becomes a visible, day-to-day problem.

Figure 2: Rising costs and operating expenses outrank uneven cash flow itself among US small employer firms’ top financial challenges. Source: Federal Reserve Banks, 2025 Report on Employer Firms.

Why do cash flow survey estimates range from 51% to 88%?

The 51% figure and the higher numbers reported elsewhere are not actually in conflict, they are answering different questions. The Federal Reserve’s survey asks firms to pick their financial challenges from a fixed list, so uneven cash flow has to compete with rising costs and operating expenses for a firm’s attention. Industry surveys tend to ask a single, broader yes-or-no question instead, closer to “have you experienced any cash flow difficulty in the past year,” which naturally pulls in a wider share of respondents.

That broader framing is exactly what Relay’s Cash Flow Compass report used: 88% of US small business owners reported facing cash flow disruptions, based on a survey of 1,004 owners conducted by Research+Knowledge=Insight in April and May 2025. Every business in that sample had at least $240,000 in annual revenue and two or more employees or contractors, so it is not a like-for-like comparison with the Fed’s broader employer-firm sample, but it points at the same underlying pattern from a different angle: cash flow trouble is closer to the norm than the exception once a business is asked directly.

A BillyPaid invoice closes part of that gap on the receivables side, since every invoice ships with a payable link and built-in reminders rather than depending on a business owner to chase payment manually.

Is cash flow struggle worse outside the US?

Not meaningfully worse, based on the closest available comparisons, though the UK and Australian numbers land nearer the higher US estimate than the Fed’s narrower one. 82% of UK SMEs reported encountering cash flow difficulties, according to Novuna Business Cash Flow’s 2025 research, based on an Opinium survey of 1,000 UK SMEs. That share climbs with business size: 91% of small businesses and 90% of medium-sized businesses reported difficulties, compared with 84% of micro businesses and 68% of sole traders.

Figure 3: Larger UK SMEs report cash flow difficulties more often than sole traders. Source: Novuna Business Cash Flow / Opinium, 2025.

The size pattern makes intuitive sense once payroll enters the picture: a sole trader’s cash flow gap usually means a delayed personal payment, while a small business with staff has wages, rent, and supplier terms all drawing on the same account at once, which multiplies the number of ways a slow-paying client can cause a visible problem. Late customer payments (36%) and seasonal fluctuations (35%) are the two most commonly cited causes among UK SMEs reporting difficulties, per the same Novuna research. For the fuller picture of what late payment specifically costs a business once it happens, see Late Payment Statistics 2026 and Late Payment Cost to Small Business 2026.

Australia’s most recent comparable figure comes from a CommBank-commissioned YouGov survey of 507 Australian small and medium business owners and decision-makers, fielded in late October and early November 2024 and published in January 2025: nearly 80% reported an impact to their cash flow in the prior 12 months.

Figure 4: Cash flow difficulty rates cluster in a similar range across Australia, the UK, and the US once each survey asks the broader question. Source: CommBank/YouGov (2025), Novuna/Opinium (2025), Relay (2025).

Do freelancers and solo operators struggle with cash flow too?

Yes, and the available data suggests they absorb the gap more directly than employer firms do, since they have no separate payroll account to draw a line around. 70% of US nonemployer firms, meaning sole proprietors and freelancers with no employees other than the owner, used personal funds to cover a financial challenge, according to the Federal Reserve Banks’ 2025 Report on Nonemployer Firms, based on nearly 6,000 survey responses from the 2024 Small Business Credit Survey.

Figure 5: 70% of US nonemployer firms used personal funds to cover a financial challenge. Source: Federal Reserve Banks, 2025 Report on Nonemployer Firms.

That figure is a meaningful contrast with the 51% employer-firm number, not because nonemployer firms report cash flow as a bigger single challenge on the fixed-list question, but because when a solo operator does hit a gap, there is no separate business credit line or payroll reserve standing between the problem and their own bank account. A late-paying client does not just delay a business decision, it delays rent or groceries. This is the same dynamic freelancer-specific late payment data captures from a different angle.

What actually causes the cash flow gap, and does it show up in financing?

The two biggest drivers by a wide margin are cost pressure and payment timing, and both compound each other rather than acting independently. Rising costs of goods, services, or wages is the single most common financial challenge among US small employer firms, cited by 75%, according to the Fed’s 2024 Small Business Credit Survey, while late customer payments sit at the center of the UK’s cash flow difficulty data as well. Half of all small businesses hold fewer than 15 cash buffer days, the number of days normal spending could continue without new money arriving, according to JPMorgan Chase Institute research covering bank transaction data from more than 600,000 small businesses, which is a thin enough margin that a single slow-paying client can turn a manageable month into a missed payment.

The consequence of that thin margin shows up directly in financing outcomes. Insufficient cash flow or revenue was cited as the reason for a loan denial or partial-funding decision in about 33% of cases among small employer firms, according to the Federal Reserve Banks’ 2026 Report on Employer Firms, based on the 2025 Small Business Credit Survey of more than 6,500 firms, ranking just behind insufficient collateral (36%) as a reason lenders turn businesses away or fund them only in part. A business already short on cash flow finds it harder to borrow its way out of the gap, which is exactly the trap the underlying data on late payment describes in more detail.

Cash flow struggle, by the numbers

Metric	Share	Region	Source (Year)
Uneven cash flow cited as a financial challenge	51%	United States	Federal Reserve Banks (2025)
Cash flow disruptions reported	88%	United States	Relay (2025)
Cash flow difficulties reported	82%	United Kingdom	Novuna / Opinium (2025)
Cash flow impact reported	~80%	Australia	CommBank / YouGov (2025)
Nonemployer firms using personal funds for a financial challenge	70%	United States	Federal Reserve Banks (2025)
Loan denials citing insufficient cash flow or revenue	33%	United States	Federal Reserve Banks (2026)

The Bottom Line

However the question gets asked, cash flow struggle is closer to a majority condition than an edge case for small businesses. On the Federal Reserve’s narrower, fixed-list measure it is 51%; on the broader difficulty measures used by Relay, Novuna, and CommBank/YouGov it is 80% to 88% across three different countries. Both numbers describe the same underlying fact from different distances: a small business holding fewer than 15 cash buffer days on average is one slow-paying client away from a visible problem, and freelancers and sole proprietors, who make up the fastest-growing share of the small business population, absorb that gap out of their own pockets more often than employer firms do.

The mechanical fix is the same regardless of which number a business recognizes itself in: shorter time between doing the work and getting paid. An invoice with a payable link and built-in reminders closes part of that gap on its own, and for the deeper data on the late-payment side of the problem, see Cash Flow Failure: Why Businesses Close 2026.

Frequently Asked Questions

What percentage of small businesses struggle with cash flow?

51% of US small employer firms cited uneven cash flow as a financial challenge in the past 12 months, according to the Federal Reserve Banks’ 2025 Report on Employer Firms, based on the 2024 Small Business Credit Survey of more than 7,600 firms. Industry surveys that ask more broadly about cash flow difficulties find higher numbers: 82% in the UK (Novuna Business Cash Flow, 2025) and 88% in the US (Relay, 2025).

Why do cash flow survey estimates range from 51% to 88%?

The gap comes down to the question being asked. The Federal Reserve’s survey asks firms to name their top financial challenges from a fixed list, and uneven cash flow (51%) ranks behind rising costs (75%) and operating expenses (56%). Industry surveys like Relay’s and Novuna’s ask a broader yes-or-no question, whether a business has faced any cash flow difficulty at all in the past year, which naturally captures a wider share of respondents.

Do freelancers and solo business owners struggle with cash flow too?

Yes, and the data suggests they lean on personal finances to cope more than employer firms do. 70% of US nonemployer firms, meaning sole proprietors and freelancers with no employees, used personal funds to cover a financial challenge, according to the Federal Reserve Banks’ 2025 Report on Nonemployer Firms, based on nearly 6,000 survey responses.

What is the biggest cause of small business cash flow problems?

Rising costs of goods, services, and wages is the most commonly cited financial challenge among US small employer firms, at 75%, ahead of paying operating expenses (56%) and uneven cash flow itself (51%), per the Federal Reserve’s 2024 Small Business Credit Survey. Among UK SMEs specifically reporting cash flow difficulties, late customer payments (36%) and seasonal fluctuations (35%) are the top two causes, according to Novuna Business Cash Flow’s 2025 research.

Sources and References

1. Federal Reserve Banks: 2025 Report on Employer Firms: Findings from the 2024 Small Business Credit Survey
2. Federal Reserve Banks: 2025 Report on Nonemployer Firms: Findings from the 2024 Small Business Credit Survey
3. Federal Reserve Banks: 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey
4. Relay: Cash Flow Compass: The State of Small Business Cash Flow (2025)
5. Novuna Business Cash Flow / Opinium: SME cash flow research (2025)
6. Commonwealth Bank / YouGov via UNSW: Australian small business cash flow survey (January 2025)
7. JPMorgan Chase Institute: Small business cash buffer research

Note: All figures verified as of August 2026.