With COVID cases on the rise, many small businesses are worried about their future and how to manage to survive the crisis. CreditCards.com recently published a new survey, based on a poll of 500 small-business owners, that demonstrates what they are doing to remain in business and how challenging the situation is.
70% in the survey agreed they have had to lean on one or more sources serving as a lifeline such as personal/business credit cards or a personal/business savings account, and loans (including the Paycheck Protection Program) since the coronavirus pandemic started in the US. Meanwhile, 71% of small businesses say they have used up all of their PPP loans, according to a recent National Federation of Independent Business survey.
CreditCards.com survey finds that 35% of the respondents have had to tap their own funds (personal credit card and/or personal savings) to help prop up their business during these hard times.
Ted Rossman, industry analyst for CreditCards.com, said “These are tough numbers, they show just how dire this is for small businesses, and also how intertwined their personal and business finances are. You kind of have to worry about some of them compromising their own financial well-being.”
Rossman also explained that business owners need to be careful with their funding sources. While the PPP loans can be forgiven if the money is used for certain expenses, the same can’t be said for business credit cards. Depending on the terms of the card the business owner may be responsible for any balance. “Typically corporate credit cards that allow the company itself to guarantee the debt are given to businesses with at least $1 million in revenue. Otherwise, any balance on the card is usually the responsibility of the owner, even if the business closes permanently.”
The original article was published by CNBC