Because many companies are struggling as the recession continues to affect some consumers, more small businesses are relying on their credit cards to stay financially healthy.
Data that will be released next month by the National Small Business Association shows that credit card use by small businesses has begun to increase over the last six months, and more owners are allowing their balances to grow, according to a report from the Wall Street Journal. However, while these accounts typically have higher credit limits than their consumer counterparts, a larger number of balances are defaulted on as well.
More small business owners are now carrying credit card balances of between $10,000 and $25,000, and a smaller number have outstanding debts of less than $10,000, the report said. Those numbers have moved in opposite directions since the beginning of 2009, as more have found it increasingly difficult to pay off their balance every month.
Small business owners must also be careful with their credit cards because accounts for companies are not protected by the same regulations as those for consumers.