Small businesses often rely on credit cards, Fed study finds
More than half use plastic to fund and expand their operations
Data whiz and visual storyteller
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.
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
- Credit card bills are first to go unpaid, Fed finds – When bills must go unpaid now, credit cards are at the top of the list, a Federal Reserve survey finds. That changed during the recession, when credit card bills were paid because they were viewed as a financial lifeline ...
- Who rolls over card debt and pays late? Study finds surprises – Among cardholders who roll over their debt from month to month, age and other financial obligations -- not income and education -- are factors in who pays on time and who pays late, a new Auriemma Consulting Group study finds ...
- American Express credit card mobile app leads in satisfaction – The survey measures mobile apps on ease of navigation, appearance, clarity of information, range of services, and availability of key information ...