A few short years ago, business credit cards were less than four percent of the total number of credit cards in existence. However, those cards did account for $430 billion, or about 1 in every 6 dollars spent via general purpose (or consumer-oriented) cards. Even if there are fewer small businesses with credit cards, they are spending far more than the average consumer.
In their 2018 Outlook: Credit, Brian Riley at Mercator Advisory Group, highlights that credit card issuers will target four segments: The $500 billion small business credit card segment is one. You can download the PDF here.
How Small Business Owners Use Credit Cards
With a market segment as big as $500B, it seemed worth taking a look at how small business owners obtain and use their credit cards. According to CreditCards.com, here are some additional statistics:
Of businesses that seek credit, 31 percent applied for a credit card and 86 percent sought a loan or line of credit. Not surprisingly, approval rates are highest for companies with higher revenue and more employees.
About 67 percent of small-business owners currently have a business credit card, but only 24 percent use it as the primary method of business spending.
As of December 2017, 31 percent of business owners said they used credit cards to meet their capital needs in the past 12 months.
Just 29 percent of small-business owners who have a credit card use the rewards to pay a business expense. And just 1 in 10 use rewards to help their business' bottom line.
Business Credit Card Vs Personal Credit Card
While it would seem logical for a company to have a business credit card, the perks and terms do not always appear as advantageous as personal cards. This article at Fundera spells out the differences between business credit cards and personal credit cards. Though I have a business credit card that I use almost exclusively for work, reading this article made me wonder if I should shift back to a personal card. For instance, some of the consumer protection laws are way stronger and while some business card issuers extend the benefits to business owners, not all do. Read the fine print.