Credit cards and business
Whilst many small businesses will have and use credit cards as an easy way of making everyday payments, perhaps typically for petrol and other expenses such as hotel rooms for business trips, it seems that an increasing number of small businesses are using the cards as an alternative to bank loans.
Common sense suggests that using a credit card in this way, unless the business can be sure of paying off the balance before interest or a significant amount of interest is added, cannot be a sensible move. It indicates the level of desperation for small businesses trying to stay afloat. It also perhaps indicates that banks are not taking a more sympathetic approach to small business loans. In all, this is simply storing up trouble for later, which seems to be endemic at the moment with even Government’s passing the parcel with debts, bailing each other out such that whilst we all know that there is considerable pain out there, the pain isn’t being felt. Sooner or later the reality must bite because one of the other big issues at the moment is the continuing uncertainty.
As regards the credit card issues, in a survey by Hilton-Baird Financial Solutions, the following results were obtained :-
- Credit cards are 1 of the top 2 external sources of finance for small business with 42% using them.
- 25% of those questioned are currently using asset finance.