B2B Payments

Consumers Might Be Riskier Borrowers Than SMEs

Shutterstock

Small businesses are better at paying debts than consumers, according to new data from Experian.

A study revealed that small business owners are better at managing their credit and debt payments than individual consumers, despite their debt balances typically being larger. The conclusions were drawn from analysis of a sample of 2.5 million small businesses and 1 million consumers, Experian said.

“Since the health of small businesses tells the tale of how the overall economy is performing, it is encouraging to see that, while small business owners have an exceptional amount of credit available to them and carry a higher debt load, they have done a great job managing their payment obligations and keeping utilization low,” said Experian Business Information Services Director of Consulting and Analytics Pete Bolin in a statement.

According to the study, small businesses have an average of $2,032 in monthly debt payments, compared to $954 for consumers.

Credit performance differences appear on credit scores, too.

Experian found that the average personal credit score for a small business owner is 721, significantly higher than the average consumer credit score of 673. An average of 7 percent of consumers have one or more revolving bankcard trades 90-plus days beyond terms in the last two months, compared to 5.9 percent of small business owners.

“In order to explore the possibilities and pursue opportunities, consumers and small business owners alike need to master the credit management skills that will allow them to achieve their dreams,” continued Bolin, “whether that dream is to start or expand a business or to finance a new home or vehicle.”

While small business owners have individual credit scores, there are also ways for the small business itself to have a rating. Small business community site Manta released a report last month exploring the consequences of a poor business score and found that there is a significant knowledge gap for entrepreneurs to understand how to find that score and what it means.

——————————–

Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

Click to comment

TRENDING RIGHT NOW

To Top