tiny Business Owners Are Leaning on Credit Cards to Survive

(Bloomberg) — For more than one-third of tiny U.S. business owners, keeping their ventures alive during the coronavirus pandemic will be coming at a high personal cost. 

As the American economy faces an unprecedented contraction along with Covid-19 deaths top 150,000, the debate over reopening states has hinged in some quarters on how to balance protecting lives along with livelihoods. Government loans through the Paycheck Protection Program have helped support some businesses, although the accumulating months of reduced revenue are forcing entrepreneurs to buoy their own businesses with their personal assets along with credit. Many have already succumbed.

“People have definitely put their livelihoods on the line here. I think they feel definitely responsible, too—in which they’ve already put in so much blood, sweat along with tears, along with they don’t want to see in which fail,” said CreditCards.com analyst Ted Rossman.

Seven in 10 tiny business owners say they’ve used some form of support for their business since March, according to a fresh CreditCards.com survey. The most common option was PPP loans, with 30% of respondents saying they received one, followed by 24% saying they turned to personal credit cards along with business savings accounts. In total, 35% of owners used either personal credit cards or savings accounts, with 10% using both, to support their business. 



a screenshot of a cell phone: tiny Business Owners Turn to Their Own Funds


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tiny Business Owners Turn to Their Own Funds

in which personal funding has further blurred the line between personal along with business finances. tiny businesses in which bring in less than $1 million annually typically need the owner to personally back the debt, meaning they’re responsible if the company can’t pay, Rossman said. in which leaves entrepreneurs on the hook for the risk, even if in which’s within the name of their business.

While in which has always been the case, the pandemic has intensified the personal financial risk to tiny entrepreneurs.

right now, tiny business owners are looking to customers to help them out: Some 32% of respondents said they need sales to enhance for them to stay afloat in which year. About one-in-5 said they would certainly need government assistance—a $669 billion federal relief program has doled out funds, along with more money will be being considered.

More than half of respondents say they won’t survive long past the fresh year without additional support.

Looking ahead, tiny businesses face high degrees of uncertainty as the rules for reopenings shift under their feet. Additionally, the economic brunt of the shutdown will be coming down disproportionately on African American-run businesses. On the big-business scale, more than 140 companies have declared bankruptcy.

“in which’s going to be hard to get more customers when people are worried about their own finances along with health,” Rossman said. “I tend to think in which in which one will be going to be a longer fix, not a shorter one, unfortunately.”

The survey, conducted July 14 to July 20 by YouGov for CreditCards.com, had about 500 responses coming from tiny business owners, which were weighted to be nationally representative. 

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