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News & Events JPMorgan Chase Institute Unveils New Data on the Financial Health of US Small Businesses

JPMorgan Chase Institute Unveils New Data on the Financial Health of US Small Businesses

Median Small Businesses Can Stay Afloat For Only 27 Days with the Help of Cash Reserves


Today, the JPMorgan Chase Institute released new research that explores the financial health of US small businesses and reveals the cash flow challenges they face on a monthly basis. “Cash is King: Flows, Balances, and Buffer Days” reports that the median small business is barely living month to month with enough cash to only withstand 27 days without cash inflows to their business.

This study leverages a new JPMorgan Chase Institute small business data asset that is constructed from over 470 million anonymized and aggregated transactions conducted by 597,000 small businesses from February to October 2015.

“It is well known that small businesses are a critical driver of economic growth, but the consistency of their growth is in question if they’re living month-to-month.  Before today, we had an incomplete view of the health of the small business sector,” said Diana Farrell, President and CEO of the JPMorgan Chase Institute. “Our data provides a new and more complete picture of small businesses and helps advocates develop the correct policies to support their long-term growth.”

Using a new data asset, this report also explores key industry characteristics that help explain the drivers of cash buffers and offers new publicly available data that help provide a comprehensive view of the small business sector.

Key Findings - Cash is King: Flows, Balances, and Buffer Days
Finding One: The median small business has average daily cash outflows of $374 and average daily cash inflows of $381, with wide variation across and within industries.

  • Average daily cash outflows and inflows vary substantially across small businesses.
  • Individual small business average daily inflows and outflows are highly correlated, meaning that as cash comes into a business, roughly the same amount of cash is paid out by a business.

Finding Two: The median small business holds an average daily cash balance of $12,100, with wide variation across and within industries.

  • At the lower extreme, small businesses in the Personal Services industry had a median average daily balance of $5,300.
  • In contrast, the High-Tech Manufacturing industry had a median average daily balance of $34,200.

Finding Three: The median small business holds 27 cash buffer days in reserve.

  • Small restaurants hold the fewest cash buffer days on average (16 days), while small businesses in the real estate industry hold the most (47 days).
  • Moreover, 25 percent of small businesses seem especially vulnerable, in that they hold a reserve of 13 cash buffer days or fewer.
  • In contrast, the top 25 percent of businesses appear substantially more resilient, in that they hold a reserve of 62 cash buffer days or more.

Finding Four: Small businesses in labor-intensive or low-wage industries hold fewer cash buffer days than those in capital-intensive or high-wage industries.

  • The median business in a labor-intensive industry like Personal Services or Repair & Maintenance carries 23 cash buffer days, while the median business in a capital-intensive industry like High-Tech Manufacturing or Real Estate carries 38 cash buffer days.
  • The median small business in a low-wage industry like Restaurants or Retail holds 19 cash buffer days, while the median small business in a high-wage industry like Professional Services or High-Tech Services holds 31 cash buffer days.

Finding Five: Small business cash buffer days vary across metropolitan areas, but no clear pattern emerges from this variance.

  • Average cash buffer days in the 24 selected cities vary from 21 days in Orlando to 34 days in San Jose, a spread of 60%.
  • Differences in industry mix and population between metropolitan areas do not explain this variation.

“A small businesses cash buffer can serve as a benchmark for the vitality of the US small business community. We hope it will spark new policy ideas and conversations about how these businesses can better manage their liquidity, increase access to credit, diversify their offerings and improve their financial resilience,” added Farrell.

Read more about the financial health of US small businesses here.


The JPMorgan Chase Institute is a think tank dedicated to delivering data-rich analyses and expert insights for the public good. Its aim is to help decision makers–policymakers, businesses, and nonprofit leaders–appreciate the scale, granularity, diversity, and interconnectedness of the global economic system and use timely data and thoughtful analysis to make more informed decisions that advance prosperity for all. Drawing on JPMorgan Chase & Co.’s unique proprietary data, expertise, and market access, the Institute develops analyses and insights on the inner workings of the global economy, frames critical problems, and convenes stakeholders and leading thinkers. For more information visit: JPMorganChaseInstitute.com.