Small source of water is fine for an American (5)
I believe the answer is:
swell
'fine for an american' is the definition.
(US informal term for 'fine')
'small source of water' is the wordplay.
'small' becomes 's' (abbreviation - e.g. clothes size).
'source of water' becomes 'well' (I've seen this before).
's'+'well'='SWELL'
'is' acts as a link.
(Other definitions for swell that I've seen before include "Excellent (slang)" , "Puff up" , "Grow larger; excellent" , "succession of waves" , "slow rise and fall" .)