Small Businesses Say Credit Card Rewards Don’t Cut It

For millions of smaller businesses across America, the ubiquitous credit card has become less of a standard payment tool and more of a financial lifeline. Staring daily at fluctuating revenue, tight cash flow and a banking system that can treat them as second-tier borrowers, small and medium-sized businesses (SMBs) are turning to both personal and business credit cards to patch funding gaps for their operations, pay bills and buy the time they need to grow.

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The line between personal and professional finance has never been more blurry. According to a forthcoming SMB Growth Monitor report by PYMNTS Intelligence and i2c, a global financial technology innovator, a striking 54% of SMBs used both personal and business credit cards in the past year to fund their operations. In large cities, that number jumps, underscoring how the long-standing consumer addiction to plastic spills over to America’s entrepreneurial engine rooms.

The lack of firewall between personal and business cards isn’t just a quirky habit of scrappy entrepreneurs. For many, the two options aren’t a binary choice — they’re a dual necessity.

Credit Card as Swiss Army Knife

Credit card usage patterns vary widely by business age and geography, but one thing is clear: Younger businesses rely on credit harder and sooner. Firms under five years old use nearly half of their available credit lines on average, compared to far less by companies with two decades under their belt. For these newcomers, credit isn’t just a convenience — it’s the fuel of stability and growth.

And it’s not just a matter of putting the gas bill for a mom-and-pop pizza restaurant on auto-pay. SMBs primarily use credit cards for ad hoc purchases — one-off buys to meet unplanned needs like emergency equipment replacements or rush orders from a buyer — rather than routine expenses. It’s a sign of how reactive and improvisational running a small business can be.

The typical SMB now holds roughly three active credit cards, mirroring consumer behavior. This multiplicity reflects the juggling act many business owners face in managing rewards, tracking expenses and staying under credit limits. But unlike the cards consumers hold, SMB business card holders often don’t have access to tailored, industry-specific tools to manage this complexity — at least, not yet.

Necessity, Not Choice

This intermingling of personal and business credit isn’t without risks. Revolving debt — especially on personal cards — can threaten both credit scores and long-term financial stability. More than half of businesses under five years old report carrying balances over multiple months, compared to far fewer older firms.

Still, for many SMBs, credit cards remain the most accessible form of working capital, instantly available and relatively easy to use. The flexibility, though, comes at a cost: higher interest rates, fragmented management and the personal liability that comes with an owner using their individual credit for business needs.

What Businesses Want (But Rarely Get)

Despite their heavy usage of credit cards, small businesses are often underserved by what their plastic offers.

Higher credit limits, for one. And business-specific perks in business cards are a particularly sore spot. Three in 10 SMBs say they would swipe more often if their card delivered benefits tailored to their industry. For construction firms, that might mean streamlined tools for automatic payments for regular, frequent purchases of concrete and lumber, and seamless integration with a company’s accounting systems. For retail and professional services firms, spending analytics and fraud alerts top the wish list.

But needs and wants diverge by company size. The smallest businesses are far more likely to prioritize cards that allow them to grow credit over time, underscoring their focus on building a secure financial foundation rather than maximizing immediate returns. Meanwhile, higher-revenue firms, which have typically developed over many years, gravitate toward cards with high credit limits and travel perks.

Despite their different motivations, smaller businesses are unified by a single reality: Credit cards are the duct tape holding together their day-to-day operations. As operating costs climb and access to traditional financing remains elusive, many have little choice but to keep swiping — giving card issuers a golden opportunity to grow revenues by offering business-specific rewards and benefits.

Key Takeaways:

• Plastic as lifeline: More than half of U.S. SMBs use both business and personal credit cards to fund operations, revealing a fluid boundary between personal and professional finance.
• Young firms, heavy use: Startups and newer businesses rely more heavily on credit, using up to half of their available limits and frequently carrying revolving balances.
• Demand for better fit: SMBs want higher credit limits and perks tailored to their industries — needs that traditional card offerings often fail to meet.

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