Small businesses are racking up credit card debt, raising some concerns
Joanne Trattoria owner and Lady Gaga's father Joe Germanotta talks the economy and inflation, NYC crime and the state of small business in a wide-ranging interview on 'Mornings with Maria.'
Small businesses are increasingly turning to credit cards as a key source of funding as they continue to grapple with still-high inflation and rising borrowing costs.
New findings published by Bank of America show that small businesses are reacting to inflationary pressures within the economy by relying more on credit cards to finance their operations. Since 2019, small business credit card balances are up 18%, according to aggregated and anonymized data.
«While rising credit card balances could raise some concerns, we note a few reasons to be less pessimistic,» the Bank of America analysts said.
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Visa Inc. credit and debit cards are arranged for a photograph in Washington, D.C., U.S., on Monday, April 22, 2019. (Photographer: Andrew Harrer/Bloomberg via Getty Images / Getty Images)
For instance, inflation as measured by the consumer price index jumped 22% since 2019 – meaning the inflation-adjusted credit card balance is comparable to, or even lower, than 2019 levels. On top of that, small business credit card spending has actually decreased since 2023, suggesting that owners are taking steps to manage spending or reallocate cash flow.
«Finally, the ratio of total bank loans, including credit card loans, and net worth for nonfinancial, noncorporate businesses – most of which are small – remains at historically low levels,» the note said. «In our view, the overall balance sheet conditions are therefore relatively healthy for small businesses.»
The Bank of America data
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