Why do Small Businesses Opt for Business with Credit Card?

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Credit Card Applications » Research » Guides » Cards for Business » Why do Small Businesses Opt for Business with Credit Card?

Why do Small Businesses Opt for Business with Credit Card?

The content is accurate at the time of publication and is subject to change.

If a credit card is used wisely, it could prove to be a very useful tool in financial management. We have previously dealt with many issues regarding the drawbacks of using a credit card. However, there are other reasons for owning a credit card and using it responsibly, especially in small businesses. For small businesses, doing business with a credit card could be a boon and a lifesaving tool especially in a financial crunch.

Doing business with credit cards

As per a survey done in 2009, most small businesses use a credit card to do their business financing. Over 50% of the respondents admitted to using credit cards for their financial needs. Only a fraction (5%) of small business owners seemed to use either an SBA loan and only a mere 1% managed without any financing in the previous year.

The statistics show that at least 23% of the owners of small businesses used just one credit card and a majority of at least 77% admitted to having used more than one credit card and around 22% admitted to using more than four credit cards.

Since most of them do business with credit cards, small businesses would suffer if they did not have capital from credit cards as they would be trapped without funds. This would in turn hamper their prospects in regards to expansion or growth. If they curtail credit card usage, small businesses feel that they might have to downsize their number of employees.

Choose the right card

Business credit cards might be of relevance to many, but still it is wise to do some research and get the right credit cards at the best terms possible. There are some credit cards that offer 5% cash back on all purchases, which are mainly office supplies and no annual fee, as well as a lesser cash back option for other purchases as well.

If one has a good credit rating, then all credit cards would come with some of the best offers. However, with disciplined usage of the credit card one could reap the benefits, but if care is not taken with the usage there could be negative fallout from using the credit card.

It is estimated that over 2/3rd of small businesses use credit cards extensively, while only around 40% use them exclusively. It is wise to use small business credit cards instead of personal credit cards, but one must be prudent with the usage and management.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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