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Survey: Half of small businesses
use credit cards for financing
Bankrate.com
 Looking
to finance a small business? We've got one word for you: Plastic.
Credit cards have become the single most popular
source of financing for small and medium-sized businesses, according
to a new survey.
In the past year, exactly half (50 percent)
of the firms asked turned to plastic to meet their capital needs.
Commercial banks came in second at 43 percent, and almost one-fourth
of companies (24 percent) used leasing.
These numbers are from the Eighth Annual Survey
of Small and Mid-Sized Businesses, conducted by Arthur
Andersen and National
Small Business United from Dec. 1999 through March 2000.
One-fifth of the companies surveyed (20 percent)
used inventory as collateral, up from 13 percent last year, and
24 percent relied on vendor credit.
But plastic cards were the biggest source of
financing -- and growing. Just three years earlier, only 24 percent
of business owners reported using them. But now, that has more than
doubled.
Most of the 557 companies that participated
in the survey report were wary of credit, however. They either don't
use cards, or pay off their bill each month. But about a quarter
carry a balance -- and 7 percent carry a balance of more than $10,000.
Only 3 percent reported carrying such a big balance in last year's
survey.
Other results from the survey: 19 percent of
respondents took out a personal or home equity loan; the same percentage
used an angel investor. And 18 percent got a private loan.
One way or another, though, 76 percent reported
they were able to obtain adequate financing.
Where are you going to get your capital?
If you'd like to make a comment
on this story,
e-mail bankrate
editors.
-- Posted: Aug. 9, 2000
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