Younger Small Businesses Rely Heavily on Credit to Fuel Growth

Forget the bells and whistles — for a significant portion of small to medium-sized businesses, the ultimate credit card perk isn’t points or airport lounge access, but simply a higher credit limit, a revelation that redefines “top-of-wallet” in the commercial sphere.

A newly released PYMNTS report, “SMB Growth Monitor Report: How Firms Use and Choose Credit Cards,” conducted in collaboration with i2c, brings to light a pivotal finding for financial institutions and FinTechs: the profound impact of credit limits on how small to medium-sized businesses (SMBs) select and utilize their primary credit cards.

Nearly half of all SMBs — 48% — specifically cite high credit limits as a key reason their primary card consistently remains at the top of their wallet.

This makes it the leading consideration, outranking factors like good interest rates and attractive rewards or cash-back offerings.

Larger SMBs and the Top of Wallet Choice

For the largest SMBs, those generating $1 million or more annually, the importance of high credit limits is even more pronounced, with 23% citing it as the number one reason for their top-of-wallet choice, compared to 18% of SMBs overall.

This signals that for high-revenue firms, sufficient credit availability is not just a preference, but an operational necessity.

Beyond initial card selection, higher credit limits are also the most significant driver for increasing credit card usage among SMBs. More than 1 in 4 SMBs (25.5%) identify an increase in credit limits as the single most important factor that would prompt them to use their primary credit card more often, and 39% list it among the reasons that would encourage greater utilization.

This desire for higher limits is consistent across various industries, from hotels and restaurants to construction and professional services, where 36% to 44% of firms would increase usage if offered higher limits.

Meanwhile, the smallest SMBs, often focused on future expansion, show interest in cards that allow them to increase credit limits over time, as they are nearly three times as likely as larger SMBs to prioritize this feature as their main reason for card choice. This indicates that flexible and scalable credit offerings are crucial for supporting the growth trajectories of nascent businesses.

Increased Spending

Beyond the imperative of credit limits, the report reveals other interesting facets of SMB financial behavior. Most SMBs — 54% nationwide and 61% in large cities — continue to blur the lines between professional and personal finance by using both business and personal credit cards for operations. Younger SMBs also utilize considerably more of their available credit (49%) compared to more established firms (approximately 33% for those over 20 years), reflecting varying cash flow needs and financial maturity.

While 52% of SMBs pay their balances in full each month, younger and smaller firms are more prone to revolving balances. These insights collectively suggest an unmet demand for more tailored, flexible credit solutions that accommodate hybrid usage patterns, varied maturity stages, and industry-specific needs, ultimately supporting small and medium-sized business growth in an uncertain economic landscape.