Credit, Collections & Insolvency News
One in five small businesses are turning to credit cards to manage cash flow, highlighting a growing trend among entrepreneurs facing unpredictable income and rising expenses. While credit cards can offer flexibility and short-term relief, relying on them without a strategy can quickly spiral into high-interest debt and financial strain.
The British Business Bank found in its annual tracker that external finance (including credit cards, bank loans and overdrafts) usage rose last year by 10% (from 36% to 46%) from post Covid-era lows. The rise was driven by a strong increase in the use of credit cards, with demand for bank loans declining.[5]
Uswitch SME expert Andy Elder said “For SMEs, credit cards can be a more practical financing tool than bank loans — offering quicker access to funds, more flexible repayment, and less paperwork, while bank loans are often harder to qualify for, slower to process, and come with strict terms that don’t always match a small business’s cash flow.”
Most common uses of credit cards for SMEs
|
Category |
Common Uses |
|
Day-to-Day Operational Expenses |
– Travel & accommodation (flights, hotels, trains) – Fuel for company vehicles – Office supplies (stationery, tech accessories) – Software subscriptions (Microsoft 365, Adobe, etc.) |
|
Business Development |
– Online advertising (Google Ads, Facebook, LinkedIn) – Client entertainment (meals, events) – Conferences and staff training |
|
Capital or Equipment Purchases |
– Technology (laptops, phones, tablets) – Machinery or tools for operations |
|
Cash Flow Management |
– Paying suppliers or contractors during tight periods – Covering unexpected costs or seasonal slowdowns |