Credit Cards Are Not the Only Option

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The National Small Business Association (NSBA) released its 2009 Small Business Credit Card Survey. In this survey, small business owners responded to various questions about their business credit usage and experiences. The survey has produced some very insightful results.

Key Points

In late April 2009, 59 percent of respondents reported using credit cards to finance their businesses in the past 12 months, up from 49 percent in December 2008
79 percent of respondents said their credit card terms worsened over the past 12 months
75 percent said their credit card terms worsened over the past six months
33 percent said their credit card limits had been reduced
33% of respondents said they received their statements after its due date.
57% received bill too close to due date to mail it in and have it received on time.

According to the NSBA, credit cards account for the largest—and growing—single source of financing being used by small businesses today. In fact, 54 percent of survey respondents reported using either two or three credit cards for their businesses.

This increase in credit card usage could be due to the increased difficulty of securing traditional bank loans, which has caused many small business owners to feel that credit cards are their only options. However, there are various other avenues that small business owners can take to finance their businesses.

Peer-to-Peer Lending

Through peer-to-peer lending, small business owners can find lenders online. These lenders “auction” off their funds, competing with one another to provide the best terms.

Equipment Leasing

For small business owners who need money to purchase equipment, equipment leasing may be an option. Equipment-leasing companies will provide equipment and charge a monthly fee for use. Often, after a certain number of payments is made, the equipment leasing company will offer the business owner an opportunity to purchase the equipment.

Government Grants

The federal government does not provide grants to businesses for start-up and/or expansion. However, there are various state business grants available for businesses. Find grants for your state online by typing in the name of your state i.e. California, followed by “state grants” in a search engine such as Google.

Merchant Cash Advances

According to the NSBA survey, 57of respondents said they accept payments via credit cards. Therefore, over half of these small business owners have already met one of the main requirements for a merchant cash advance and could qualify to get up to $500,000 for their businesses.