Business Credit Cards and B2B Payments: Addressing Credit Opportunity

In March 2016, 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.

Our survey shows that more than 4 in 5 small businesses have a positive outlook and expect this year 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 8 in 10 who have a business credit or charge card.

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.

“Small businesses desperately need credit and access to ‘just in time’ funding,” notes Karen Augustine, Mercator Advisory Group’s Manager of Primary Data Services, the author of this report. “Business credit is the perfect solution but business credit lines are not always sufficient for their business needs.”

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. 

This report contains 34 pages and 16 exhibits.

Subscribers to Mercator Advisory Group’s 2016 Small Business Payments and Banking Survey have access to these reports as well as survey crosstabs, PowerPoint slides of the report exhibits, and the option of requesting custom queries from the survey data.