The economy may be recovering slowly, but many small business owners are still having trouble getting enough capital together to cover their needs, and are therefore relying more heavily on the ability to take on credit card debt.
The majority of the nation's 27 million small businesses rely heavily on credit cards to provide working capital, and the ongoing economic problems in the country have caused many to increase the amount they borrow and scale back the amount they pay on their monthly bills, according to a report from the Wall Street Journal. The National Small Business Association will soon release statistics that show many of these companies have allowed their balances to grow to between $10,000 and $25,000 while fewer now have debt totals of less than $10,000.
In addition, fewer are paying off their credit card bills every month, continuing a trend observed since June of last year that may make it more difficult for them to get out of debt, the report said.
This may end up being problematic for many small businesses because their credit cards are not protected by the same regulations as consumer accounts, and therefore can see the terms of their agreements change without notice.