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Are you relying on credit cards? You aren’t alone

Small businesses are increasingly relying on credit cards to make ends meet, according to data released by the National Small creditcardBusiness Association. Those same businesses also report that credit-card terms are worsening in this economy.

The NSBA 2009 Small Business Credit Card Survey provides a detailed view of how small businesses are utilizing their credit cards, how their credit-card companies are treating them, and the impacts of deteriorating credit-card terms on their business.

Approximately 44% of respondents had 1-5 employees, 25%, 6-19; and 22%, 20-99 employees. More than half (56%) of respondents were in business for more than 16 years, with 20% in construction and 16% professionals (doctors, attorneys, and accountants, for example).

“As small businesses across the nation are struggling to keep their doors open, the need for affordable and fair credit-card financing is critical,” stated NSBA President Todd McCracken. “Credit cards account for the largest—and growing—single source of financing being used by small businesses today.”

Conducted between April 27 and May 5, the survey showed that 59 percent of small-business respondents used credit cards in the past 12 months to finance their business, up from 49 percent in December 2008. This increase is occurring despite a rise in the number of small businesses reporting worsening credit-card terms. Asked to evaluate their credit-card terms over the last five years, 79 percent reported worsening terms—up from 69 percent in December 2008. Even more eye-opening: when asked if their credit-card terms had worsened in the last six months, a whopping 75 percent reported that they had. Twenty percent reported interest rates of 20% or more; 28%, rates of 15% to 19%; and 31%, rates of 10% to 14%.

The NSBA 2009 Small Business Credit Card Survey comes on the heels of passage of critical credit-card reform legislation in the U.S. House of Representatives and in advance of expected debate on a similar measure in the U.S. Senate. NSBA has been an active and outspoken proponent of credit-card reform, citing the ever-increasing reliance small businesses have on credit-card financing.

Source:  National Small Business Association,

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