New Report Affirms Value of Credit Cards for Small Business

Credit Cards Are Top Funding Source for Small Businesses

Credit Cards with Rewards Cited as Top Borrowing Tool for Unplanned Costs

Washington, DC – The Small Business Payments Alliance (SBPA) issued a report today containing new data that affirms the value of credit cards for small businesses. According to consumer surveys and new research conducted over the first quarter of 2024, credit cards remain a top funding source for small and medium-sized businesses. Credit card rewards programs were also cited as the top borrowing tool for unplanned costs.

“Once again, the evidence affirms the value of credit cards and rewards programs for small business. So why would Congress consider legislation that would threaten the electronic payments system? Small business owners don’t need Congress to try to ‘fix’ a system that isn’t broken,” said SBPA Spokesperson Peter Kauffmann.

The report underscores several key findings:

  • Credit cards are the top funding source for small businesses. Credit cards are a valuable source of financing for small and medium-sized businesses (SMBs).Numerous surveys have found that credit cards, particularly those offering rewards, are consistently ranked as SMBs’ top source of funding, above other resources such as lines of credit, BNPL, or loans.
    • Nearly a third (30%) of SMBs reported that they relied on credit cards over the past 12 months for funding – the top funding source reported.
    • When asked about their reasons for using corporate cards, SMBs cited numerous reasons related to growth, unexpected expenses, and predictable expenses – including meeting cash flow needs (54%); emergency expenses (43%); buying inventory or services (30%); company assets (22%); and business expansion (19%).
  • Small businesses rely on credit card rewards for unplanned costs.  SMBs use credit cards to handle both predicted and unexpected expenses. According to a survey from PYMNTS, credit cards help small businesses pay for usual expenses (e.g., buying inventory) as well as unplanned costs (e.g., receivable shortfalls), all in the name of fueling business growth.
    • In a survey studying borrowing habits among SMBs, credit cards with rewards were cited as the borrowing tool most preferred for handling unplanned costs (25%). Line of credit was second (15%).
  • Credit cards help small businesses during the holiday season. Small business owners used their credit card rewards programs to help themselves and their employees during the 2023 holiday season. Rewards points were used for employee benefits, keeping spending down, and growing and retaining consumer/client bases.
    • SMBs utilized rewards during the holiday season to reward employees (42%); celebrate holidays with employees (35%); keep spending down (31%); retain new clients (29%); and grow customer base (27%).
  • Small businesses earn greater income when customers use credit cards. Credit card transactions guarantee payment and avoid the costs and risks associated with cash (such as errors in counting, storing, transporting, and safeguarding). Credit cards also create opportunities for small businesses by granting access to e-commerce and mobile commerce channels, which are growing rapidly as more and more customers take advantage of online purchasing
    • When a business first starts accepting card payments, their average transaction size increase by 10 to 15 percent.