Why Credit Cards are Important to Small Businesses
Tom Gazaway in his Small Business Trends article could not over-emphasize how important credit card borrowing is for small business owners. Credit card borrowing is the foremost source of financing for them. The National Federation of Independent Business reports that 79% of small business owners use credit cards to run their businesses. Gazaway says credit card usage has the following advantages: low-cost financing (with 0% intro offers and very reasonable interest rates), no collateral needed, and reasonable and flexible monthly payments. There are many who do not like credit cards. He counters, ” They can be used the right way or the wrong way as you build your business.”
According to the Keybridge Research study, the impact of credit card usage and specifically business credit cards on small business growth is very real and quantifiable. According to this study they found that for every $1,000 of credit card use for small business owners there is an average of $5,500 in increased firm revenue. Additionally, from the years 2003 to 2008, they estimate that the expansion of credit card lending in the U.S. contributed to the creation of 1.6 million U.S. jobs.
According to the National Federation of Independent Business, 79% of small business owners use credit cards to run their business. So it’s not only true that credit cards are a vital part of the overall funding strategy for small business owners, but in some cases, it’s the only form of credit they really have.
The banks are back to making nice profits in their credit card divisions and the write-offs are at historic lows so you’re going to see some slight adjustments made by lenders to extend more credit. But here’s the key – they are going to do it to the “credit-worthy” consumers and small business owners.
Credit cards are a great financing tool for small business owners and sometimes it’s actually their only option. I realize there’s an army of people out there who don’t like credit cards and that’s okay but they are like anything else – they can be used the right way or the wrong way as you build your business.
Where else can you find low-cost financing (0% intro offers are as good as it get’s and there are millions who have maintained very reasonable interest rates on their credit cards despite what CARD Act proponents may claim), not need collateral, have quite reasonable monthly payments, along with flexibility of monthly payments that is invaluable to a small business owner who is managing cash flow? …
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