B2B Payments

Business Owners Turn To Personal Credit Cards

The wallets of small business (SMB) owners are bulging with plastic, thanks in large part to the difficulty of securing funding, which leads to those merchants using their personal credit cards to meet expenses.

That’s according to Nav, which helps business owners find financing and access credit. To arrive at its findings, Nav “analyzed anonymized personal credit card usage data from 143,004 of its small business customers and 128,281 of its consumer customers. Business credit cards were excluded from the data.”

Nav discovered that the business owners surveyed carried an average of 4.78 personal credit cards, which compares to 2.32 for the average consumer.

“The average total limits on those cards among the two groups mirrors this as well, as average consumers hang in at about $18,401 and business owners at $35,291,” the report said. “What’s surprising about the data is that it pertains to personal cards — not business credit cards, which generally don’t show up on personal credit reports unless the cardholder defaults or misses payments.”

Nav said 24 percent of small business owners used their own credit cards the last time their businesses needed funding. “This not only confirms that finding funding for a business is difficult, but that some business owners could be overleveraging their personal credit to fund their business,” the company said.

Business owners spend an average of 33 hours searching for and applying for credit, the company said. “Multiple issues can arise when you use personal credit cards to fund your business. By maxing out your cards, you can ruin your credit score,” Nav said. “By leaning mostly or exclusively on personal credit cards, you miss out on opportunities to build a strong business credit profile and access better financing options for your business.”


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.