Small firms reject loans in favour of credit cards

Credit cards seem to be the preferred cash influx to use when you are running a small business. This is being seen as more and more small businesses turn away from the banks and loans, to use credit cards to finance their firms.

This has all came about after a study on small businesses by the Federation of Small Businesses, who found that out of the 18,000 who took part in the study the amount of owners who now use credit cards rose 7.5%, from 18% to 25.5%. You may think that is not that great a figure, but when put beside the number who have turned their backs on bank loans, it is easy to see where small business, sees where their financial future lies, because the application for loans has fell a mighty 14%, from a total last year of 44% to 30% this year.

Some have said by using credit cards, the small business may get caught up in the need for debt, which seems to have stuck the average British consumer, though up until now the credit card seems to be getting used wisely in the small business world.