Four out of five small businesses have a positive outlook and expect 2017 to be a good time to borrow funds to invest in their businesses. Nearly all have some type of business account with a financial institution including eight out of ten who have a business credit or charge card.
Mercator Advisory Group fielded a web-based survey of U.S. small businesses (between $500 thousand and $5 million annual sales) regarding payment acceptance, B2B payments and use of banking services and alternative lenders. Business Credit Cards and B2B Payments: Addressing Credit Opportunity is the second of three reports summarizing the results of the 2016 Small Business Payments and Banking Survey.
Small businesses are a vital segment of the U.S. economy since they fuel job creation and foster economic growth in the United States.
Yet the value they contribute to our economy is often understated because individually they are relatively insignificant. Collectively, though, an estimated 27–28 million small businesses accounted for at least 60–80% of all U.S. jobs in 2012 and two-thirds of new jobs created in the decade 1993 to 2013, according to the U.S. Small Business Administration.
Mercator Advisory Group’s 2016 Small Business Survey findings show that this collectively powerful market segment has clear financial needs. Nearly all firms in this segment have business relationships with a primary financial institution to provide business debit, credit, charge cards, or checking accounts and relationships to obtain a host of other services provided from financial institutions as well as nonbanks.
Their financial needs are complex and many struggle at least at some point to manage their cash flow, as small businesses are more prone to seasonal business volume fluctuations and delays in collecting on invoices, collections that affect their purchasing power. Small businesses are more likely than consumers to carry balances on their credit cards, and many use their personal accounts to get the credit they need to finance business purchases.
In total, over 1,600 qualified responses were obtained from decision makers at revenue-qualified small businesses that accept credit and/or debit cards for payment. The sample included a geographically dispersed quota of 500 responses from businesses with annual sales of $2–5 million and the remainder from businesses with annual sales of $500,000–$1.99 million.
Highlights of this Insight Summary Report include:
Most common methods of payment used for B2B payments
Number of employees with business credit or charge cards
Most important features for business credit cards
Business credit card payment behavior
Use of credit lines
Reasons for using personal credit or charge cards for B2B payments
Frequency of purchase delays caused by cash flow concerns
Experience with online alternative marketplace lenders
This report contains 34 pages and 16 exhibits.
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