SMBs Want Higher Limits, Better Rewards, and Hybrid-Friendly Tools: Credit Card Issuers Must Evolve

Small businesses are looking for higher credit limits and better rewards from their credit card providers, according to a new study from PYMNTS Intelligence and financial technology company i2c.

The study unearths the money management practices of small businesses and reveals a mismatch between what smaller companies want in a credit card and what their current card offers. 

The authors of the study noted that “many businesses say they would increase their credit card usage” if their cards came with features such as higher credit limits or better rewards.

When small business owners speak, credit card issuers should listen. The U.S. is home to more than 33 million small businesses, and they make up a staggering 99.9% of all businesses in the country. 

The PYMNTS Intelligence and i2c study is the result of a survey that 583 small businesses participated in earlier this year. Those businesses came from a variety of sectors, including construction, consumer services, hospitality, and retail.

Nearly half of the businesses that participated in the study say they choose which credit card to put at the top of their wallet based in part on the card’s credit limit. Other leading factors that influence which card a small business pays with include a card’s interest rate and the rewards or cashback programs it offers.

The study segmented small businesses into groups based on their annual sales figures. Those that generate more than $1 million per year are more likely to say they use the card that offers them the highest credit limit.

Businesses with between $150,000 and $1 million in yearly revenues cite a card’s interest rate as the key factor they look for in choosing a primary card.

The smallest of small businesses included in the study value credit cards that permit them to access higher credit limits over time. In other words, they’re looking for a payment tool that can grow with them as their business expands.

Of course, these businesses can help themselves out in that regard. How a business manages their credit card, including how much of their limit they use each month and whether they pay their balances in full each statement cycle, can affect the credit limit on their card.

But business owners may not know that. Credit card issuers have an opportunity to educate their small business customers about the steps they can follow to access higher credit limits over time. Issuers who offer educational programs tailored to small businesses that are just starting out can gain their loyalty and grow with them.

More than half of small businesses pay for company expenses with a personal credit card.

The study indicated that 54% of small businesses use a personal credit card in addition to their business card to fund their company’s operations. The study’s authors highlighted that this practice “signals a need for intuitive, multi-functional payment tools.”

Issues may have an opportunity to cross-sell other solutions to companies that currently use personal payment products for business expenses.

“To better support businesses’ real-world behaviors, focus on flexible credit offerings that accommodate hybrid usage patterns,” the study’s authors suggested.