Inc Magazine recently published the results of a report that was conducted by Keybridge Research for the American Bankers Association click here. In it we see some tangible proof of what we’ve always known in theory: business credit lines increase revenues, create jobs, and stimulate the economy.
Some of the highlights are:
*In a 5 year window from 2003 to 2008 the increase in small business credit card useage “contributed directly to the creation of 592,000 small business jobs and an additional one million direct or induced jobs throughout the US economy.” Wow…did you hear that? Pretty impressive. There’s a stimulus package idea…increase business credit card useage and let’s stimulate the economy Mr. Obama! I’m sure he would like that since he’s made numerous efforts to get banks to increase their small business lending.
*Keybridge also found that each 1% increase in credit card use is associated with .11 percent in firm revenue. Specifically, the report says “On average, an extra $1,000 in credit card use would be associated with about a $5,500 increase in firm revenue.”
Since there are 27 million small businesses and they spend up to $5 Trillion a year there is definitely plenty of business for the banks to cater to in the small business credit card arena. It is also known and understood that the majority of the spending in this space still happens on a check so getting small businesses to use terms and maybe take advantage of rewards benefits offered through business credit cards has a lot of room for growth.