Small Businesses and Credit Cards

Since our firm is a member of the Better Business Bureau, I read the BBB’s weekly updates.  This week the BBB recommended an article on small businesses and credit cards that got my attention because it mirrors what we see with our small business clients who come in for credit card counseling and bankruptcy counseling.

Wisdom from the Kauffman Foundation

According to a study released by the Kauffman Foundation, every $1,000 increase in credit card debt increases the probability a firm will close by 2.2 percent.

This is not to say that using a credit card to start a business means it will fail, since about 58 percent of the firms in the survey sample used credit cards in their first year of operations.

“Credit card debt alone doesn’t determine how stable a business will be, but it does appear to be a significant influencer in the company’s probability of survival.”

Bringing it home to your small business

At a time when small business lending has decreased, many small businesses have nowhere to turn but credit cards.

If you are facing difficulty paying your credit cards on time or in full, call our offices for advice on how to proceed.  We understand all aspects of credit law and will guide you in making the right decisions, whether that entails negotiating on your behalf with creditors, restructuring your business or confirming for you that the path you’re on makes the best sense.

Business owners with accurate information always make better decisions than those who listen to the advice of their creditors.