Business Credit Cards Statistics And Trends In 2023 – Forbes Advisor

As its name implies, a business credit card is only open to business owners and is intended for business use. Unlike with a corporate card, however, your business doesn’t need to be incorporated for you to qualify for a business credit card.

For this reason, everyone from sole proprietors to large company owners could be eligible for a business credit card. Having employees or an office is not required. Even side gigs, such as rideshare driving or online reselling, can qualify as businesses for the purposes of getting a business credit card. See our list of best credit cards for startups for more information.

Business credit cards are meant to be used for business expenses, like purchasing supplies, office furniture or business travel. In fact, most business cards have a stipulation in their terms and conditions that prohibit cardholders from using them for personal expenses.

The results of Forbes Advisor’s recent 2023 poll are as follows:

In 2022, 29% of businesses sought funding via business credit cards and 4.67% of respondents reported that they had used business credit cards as their primary source of funding to kick-start their businesses. Once businesses were established, 69.33% attempted to acquire a business credit card, with 31.07% successfully approved.

Of those who utilized either a business or personal credit card to fund their business, one in four—25.4%—chose to use a credit card due to restricted access to conventional financing alternatives. Respondents who used business credit cards as a funding method typically used between $160,000 to $250,000 (39.7%).

Due to the higher monthly expenses and incomes associated with businesses, business cards often come with significantly higher credit limits. The number of cards a business needs will depend on its specific financing requirements.

A reseller or a freelancer might find that one business credit card is sufficient. A consulting firm with multiple employees might benefit from both cash-back business cards and travel business cards that provide things like rental car insurance benefits. Additionally, more credit cards means more overall credit, which might be needed to purchase inventory or help manage vendor payments.

According to the data collected by Forbes Advisor, most new businesses applying for business cards—88.61%—had at least three cards. Of entrepreneurs who used business credit cards to initiate their businesses, 34.3% had three new cards, 45.71% secured a total of four cards for this purpose and 8.6% had five or more.

• 48.5% of entrepreneurs who utilized business credit cards as their primary funding method said that struggling to effectively handle debt repayments was the number one drawback.
• 66% of respondents reported opting for alternative methods to start their businesses instead of using credit cards due to concerns about potential damage to their credit scores
• 61% of respondents refrained from using credit cards for business financing because they required a higher credit limit.
• 49.2% of respondents who used a business credit card as their primary financing method expect to take four to six years to fully repay the initial debt incurred.

Most business owners took out a business loan to finance their business, or received loan from friends or family. Among respondents who used business credit cards as their primary source of funding, 77.14% believed that the main advantage of this financing option was increased access to capital, compared to 64.28% of those who used personal credit cards.

A flexible payment timeline was the top reason for choosing personal credit cards to kick-start a business, as reported by 39.28% of respondents. 45.71% of respondents stated the primary reason for utilizing business credit cards to start their businesses was to avoid debt.

• At 62.85%, a majority of those who used business credit cards to start their businesses attributed their success to this financing method.
• An overwhelming majority of respondents—91.4%—who used business credit cards to primarily fund their businesses would recommend this method to other entrepreneurs embarking on new business ventures.
• A total of 54.2% of respondents who used business credit cards as their primary business financing method indicated that they consistently paid off their monthly balances in full.
• Quick access to funds motivated 22.8% of respondents to utilize business credit cards as their primary funding method.
• About one in five—20.6%— of respondents who used either a business or personal credit card to fund their business were motivated by the prospect of earning rewards or cash back.

There are numerous potential benefits to holding a business credit card, provided you have the capital to pay your balance every month. Some of those benefits are as follows:

• Keeping personal and business finances separate: Having a separation between personal and business expenses separate can make your financial life much more simple, especially during tax season.
• Less impact on your personal credit: Most business credit cards won’t report to your personal credit as long as the account is in good standing.
• Boosting your business credit rating: Business credit cards can help you establish business credit if you make timely payments. This could be especially useful if you may apply for a business loan in the future.
• Improving business cash flow: Having a healthy cash flow is important for any business. By having access to credit, you can pay for expenses throughout the month and take advantage of your credit card grace period to increase your access to cash.
• Personalized spending controls: You can monitor employee spending patterns by adding employee cards to your account. Many business cards also offer the ability to set spending limits on employee cards.
• Numerous company-specific rewards: The cash-back percentages, travel benefits, mileage earning and welcome bonuses that come with business credit cards may be higher than with personal credit cards and also typically will target business-specific categories.
• Travel and other business-related perks: Many premium business cards offer perks such as airport lounge access, discounts on shipping or software services or car rental insurance for business travel.

Fed Small Business: Small Credit Survey
SBA.Gov: Financing Patterns and Credit Market Experiences: A Comparison by Race and Ethnicity for U.S. Employer Firms
Chamber of Commerce: Small Business Statistics
Experian: Women in Business Report
Forbes: How Many Credit Cards Should A Small Business Owner Utilize
Experian: Beyond The Trends – Fall 2022 Report
US Chamber of Commerce: How Technology Enables Small Business
US Chamber of Commerce: Small Businesses’ Growing Concern about Raising Capital
Forbes Advisor: Business Loan Vs. Business Line Of Credit: Which Is Best For You
Forbes Advisor: Small Business Loan Statistics And Trends 2023
Fed Small Business: 2023 Report on Employer Firms
Forbes Advisor: One Poll survey February 2023