The macroeconomic challenges of recent years have hit small businesses hard, prompting many merchants to rely on personal credit cards to keep their operations running.
While some small business owners may not qualify for business credit lines, a study from Bluevine identified another challenge: among the roughly two-thirds of business owners surveyed who applied for a business credit card or loan in the past year, many overlooked important steps in the application process.
These included researching lender approval requirements, updating financial statements, and reviewing their business credit scores before submitting applications.
“The most valuable commodity for a small business owner is time,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “As successful businesses grow, the need for capital to expand or upgrade systems becomes obvious, but many business owners haven’t budgeted the time to be sure their financial profile is organized before applying for credit.”
“As a result, many fall back to using existing personal credit sources like credit cards, even though commingling business and personal finances often creates more problems than it solves,” he said. “Most business owners don’t realize that the time to apply for a business credit card or line of credit is when they don’t need it. If they wait until they need the money it’s much harder to get approved.”
Navigating Funding Crunches
As access to financing has tightened, many small business owners have turned to personal funding sources. The Bluevine study found that roughly three-quarters of respondents used personal credit cards or loans to cover business expenses over the last year.
While this approach can provide short-term flexibility, it may also create longer-term challenges by making it more difficult to establish a strong business credit profile while also affecting the owner’s personal credit. In some cases, it could influence their ability to qualify for products such as mortgages, auto loans, or other forms of financing.
Younger business owners may be especially vulnerable, particularly those transitioning from freelance or gig work, where the distinction between personal and business finances is often less defined.
Closing the Information Gap
Although application errors and omissions can affect approval outcomes, financial institutions also have the opportunity to better support small business owners throughout the lending process. Many banks continue to emphasize rates and fees, but small business owners are increasingly looking for practical guidance and tools that help them better understand and manage their finances.
Since a business credit card is often the first financial product an entrepreneur pursues, it also represents an important opportunity for banks to build long-term relationships. Providing clearer education about available products, eligibility requirements, and the application process can help business owners make more informed decisions.
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