Recently, Lending Tree published a report that gravely warned as many as 40% of small businesses have less than a month’s worth of cash and that, without government help, “are in danger of shutting down” — 40%! Even if a third of the 30 million small businesses in this country shut down (Lending Tree’s range was 24% to 40%) that would be like 10 million businesses going bust, according to an op/ed published by The Washington Times. That sounds terrifying until you look at this 2016 report by JP Morgan Chase, which revealed that the typical small business — even in growing economic times — normally has only 27 days of cash on hand. Not only that, but the JP Morgan Chase study assumed no future revenues, which is a lot worse of a scenario than today’s reality. So what’s up with this? A representative from Lending Tree admitted that “there isn’t typically a ton of businesses closing en masse,” but, he wrote back to me that “what is interesting now is that business revenues plummeted in March and April, and as of yet still have not recovered. That suggests businesses may need to pay their bills by other means.” What means could that be? Ah-hah! Maybe financing from Lending Tree? Also misleading is when academics make sweeping statements like the one made by a University of Connecticut economics professor where he literally predicts that giant corporations may be the “only survivors” in the post-pandemic economy. Yes, that’s right folks: All 30 million small businesses will be wiped out.
