BACK

Sean Gladwell/ Moment/ Getty Images Plus

Research and Statistics

Small businesses often rely on credit cards, Fed study finds

Summary

Credit cards play a major role in financing small businesses, a new Fed survey finds. More than half of small businesses surveyed (51 percent) reported using credit cards for their operations on a regular basis.

The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

When small businesses need money to fund or expand their operations, credit cards are an important part of their financing toolkit.

While loans and lines of credit are far and away the No. 1 source of financing tapped by businesses with under 500 employees, credit cards are in second place, according to a survey by the Federal Reserve Bank. More than half of these small employers (51 percent) reported using credit cards for their business on a regular basis.

The Federal Reserve Bank found 4 in 10 businesses with 1-499 employees applied for financing within the previous 12 months. The share is down slightly from 2016, when 45 percent sought financing.

The study also found that, of those small-business owners seeking financing, 27 percent applied for a credit card, with 63 percent opening a business card account and 30 percent opening both business and personal credit cards for use by their business.

The Fed’s Small Business Credit Survey collects information from firms across all 50 states and the District of Columbia through the joint efforts of all 12 Federal Reserve Banks. The 2017 survey collected 8,169 responses from employer firms, with results weighted to reflect the full population of small businesses in the United States. Results of the survey were released May 22, 2018.

Small businesses often rely on credit cards for financing, Fed study finds

See related: Best small-business credit cards, Infographic: How small-business owners use their credit cards, 7 things to know about business credit cards, How to fund a small business, More infographics

What’s up next?

In Research and Statistics

Poll: Women more prone than men to miss card payments

People miss credit card payments for many different reasons, but the most common are forgetting and not having enough money.

Published: July 2, 2018

See more stories
Credit Card Rate Report Updated: December 4th, 2019
Business
15.09%
Airline
16.88%
Cash Back
17.38%
Reward
17.04%
Student
18.58%

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.