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Small businesses relied more heavily on credit cards for business financing during the first four months of this year at the same time their credit lines were shrinking, suggest the results of a survey the National Small Business Association released this week. The Washington, D.C.-based organization surveyed 288 of its members online between April 27 and May 5. Some 59% of respondents said they used credit cards during the previous 12 months to finance their businesses compared with 49% who said so in December 2008. Some 33% of respondents said card issuers had reduced their credit limits in recent months, up from 28% who said so in December. Forty percent of respondents said they paid their credit card bills off in full each month, down from 50% who said so in December. Credit cards are the leading type of business financing respondents use (59%), followed by bank loans (45%), vendor credit (30%), private loans (19%), leasing (7%) and Small Business Administration loans (5%). Some 19% use no financing vehicles. The number of cards respondents who use credit cards as their primary financing tool carry varied: 23% reported having one card, 31% had two, 13% had three, 10% had four and 23% had more than four. Fifty-seven percent of the small businesses surveyed said they accepted credit cards, and 43% did not. Some 60% of those surveyed said the rules surrounding what constitutes a late payment vary for each of their credit cards, while 14% said late-payment policies do not vary and 26% were not sure. Asked whether they ever have received a credit card bill too late by mail to pay it on time, 57% said yes, 35% said no, and 8% were not sure. Asked whether any of their credit cards have due dates that seem to "randomly change," 48% said yes, 37% said no, and 15% were unsure.
