Small companies access credit in all sorts of ways.
Take retail for example. Quite a lot of small to medium retail operations do not (cannot) afford to pay upfront for all their inventory--especially for seasonal events. A retail store might double or triple their inventory on hand during November, in anticipation of the holidays shopping rush in December.
So the stores buy on credit. The credit comes from their suppliers, not a bank--usually some type of payment terms like net 60 days.
Of course it's not like manufacturers or suppliers have giant piles of cash sitting around either. Often they are also accessing credit themselves, in order to provide these terms to the stores which are their customers. If they are bigger than their customers, they might have more options for accessing credit from banks or other financial institutions. But it might be that they are also receiving credit their their upstream suppliers, who are themselves accessing credit from financial institutions.
All this is to say: even small firms might be affected by the ease or difficulty of accessing credit from financial institutions, even if they are not accessing it directly themselves.
> and perhaps the odd bank loan secured by the personal assets (read: homes) of the founders?
Consumer credit has also changed. It's harder to extract value from your home now than it was 10 years ago. Banks have higher underwriting standards and are themselves subject to more regulation (from the CFPB for instance).
Take retail for example. Quite a lot of small to medium retail operations do not (cannot) afford to pay upfront for all their inventory--especially for seasonal events. A retail store might double or triple their inventory on hand during November, in anticipation of the holidays shopping rush in December.
So the stores buy on credit. The credit comes from their suppliers, not a bank--usually some type of payment terms like net 60 days.
Of course it's not like manufacturers or suppliers have giant piles of cash sitting around either. Often they are also accessing credit themselves, in order to provide these terms to the stores which are their customers. If they are bigger than their customers, they might have more options for accessing credit from banks or other financial institutions. But it might be that they are also receiving credit their their upstream suppliers, who are themselves accessing credit from financial institutions.
All this is to say: even small firms might be affected by the ease or difficulty of accessing credit from financial institutions, even if they are not accessing it directly themselves.
> and perhaps the odd bank loan secured by the personal assets (read: homes) of the founders?
Consumer credit has also changed. It's harder to extract value from your home now than it was 10 years ago. Banks have higher underwriting standards and are themselves subject to more regulation (from the CFPB for instance).