by Alison Storm | 07/16/10

Statistics from the Federal Reserve show that 83 percent of small business owners use credit. They use it to regulate cash flow, monitor purchases and stock up on inventory. A recently issued report explains how small business credit cards are used differently than consumer credit cards:

• Small business credit cards typically have higher credit limits than consumer cards.


• Small business credit cards are more costly for credit card companies to issue and service than consumer cards.


• The risk is higher for small business credit cards because losses typically run  20 percent to 30 percent higher than with consumer cards.


• The majority of small business owners use credit cards.


• Fewer small business owners carry a balance on their small business credit cards. Only 18% carry a balance compared to about 25% of consumer credit cards.


• Around one in five small business owners tried to obtain a credit card last year.


• Of those that tried to get a credit card last year, three out of four were approved for a small business credit card. However, when small business owners went to a bank for a loan only half of them were able to secure a loan.

Industry experts agree that small business credit cards are used very differently than consumer credit cards. American Express spokesman Tom Sclafani told Fox Business, "When you think about how much a business owner could spend in a given month versus consumers, it's very different. Their income may be less predictable. Business owners who fall into that category might need to extend their payments longer. They need greater flexibility."