Credit Card Giants Miss the Mark With Small Business

In the complex world of small and medium-sized businesses (SMBs), financial and operational agility is often the key to survival and success.

Against this backdrop, credit cards are emerging as both an essential tool and a persistent frustration.

A newly released PYMNTS Intelligence report, “SMB Growth Monitor Report: How Firms Use and Choose Credit Cards,” conducted in collaboration with i2c, reveals a systemic misalignment between what credit cards offer and what many industry-specific SMBs truly need.

Despite many credit card options, SMBs say they’d spend more if cards offered features tailored to their industry. Construction firms want automation; salons want fraud protection; retailers want perks. Yet most card programs treat them the same. These are not businesses that lack credit, but businesses underserved by the blunt instruments of generalized financial products.

What emerges is a picture of a financial services gap, a “missing middle,” where traditional credit card offerings fail to meet the nuanced, evolving demands of America’s most dynamic business segment.

Blurred Line Between Business, Personal Finance

Among the report’s most arresting findings may be the extent to which SMBs mix personal and business credit use. Fifty-four percent of surveyed businesses reported using both personal and business credit cards to finance their operations, rising to 61% among firms in large cities. This practice is especially common among younger firms and urban startups that haven’t yet established robust financial infrastructure or long-term banking relationships.

For these SMBs, credit cards are not just financing tools but stopgap solutions in a financial system not yet optimized for their needs. While flexibility is valued, this hybrid credit usage reveals a market inefficiency: Traditional business credit offerings are simply not compelling or comprehensive enough to stand on their own.

The most glaring weakness in current credit card offerings lies in their lack of industry customization. Only 15% of SMBs cited “business-specific perks” as a feature that would increase card usage, seemingly a small share, until you understand the context. That number balloons when responses are broken down by industry.

Construction firms, for example, want automation features that streamline high-frequency purchasing of raw materials. Professional services crave analytics tools to manage billing and client reimbursements. Retailers demand seamless integration with accounting software, while consumer services, especially those with high customer interaction, are heavily focused on fraud protection.

And yet, most credit card products used by these businesses offer only generalized benefits: cash back on office supplies, fuel discounts or vague points-based systems. The disconnect between how these businesses operate and how their cards support them is stark.

Read the report: SMB Growth Monitor Report: How Firms Use and Choose Credit Cards

This misalignment limits not only credit card usage but also loyalty. It can create churn in issuer relationships and force SMBs to manage multiple cards, averaging three per business, mirroring consumer behavior, but also adding unnecessary complexity.

Today’s SMBs are digital-first, growth-focused and industry-specific in their needs. They require more than just a line of credit. They need a financial partner.

Part of the problem is scale: Most banks and issuers are still built to service either consumers or large corporates. SMBs fall awkwardly in between. Their needs are specific, evolving and intensely contextual, too complex for cookie-cutter retail banking but too small to warrant dedicated corporate accounts.

As a result, SMBs end up cobbling together their systems, mixing personal cards with business ones, juggling multiple issuer relationships and revolving balances to stay afloat.

The “missing middle” in credit for SMBs is not about access, but about appropriateness. There’s no shortage of cards available to small businesses. What’s missing are financial products built with the operational, strategic and psychological realities of SMBs in mind.

The credit card isn’t dead for SMBs. But the one-size-fits-all version certainly is. The future belongs to those who understand the missing middle and get started building for it.