We have talked previously about the pros and cons of business credit cards. They can be advantageous, yet can cause a host of other problems, both for the business and the personal owner as well. However, using credit wisely can be a useful financial tool, and sometimes a lifesaver for a small business, especially when cash flow is in a crunch.

How Many Businesses Finance with Credit Cards?

The National Small Business Association (NSBA) in its 2009 Small Business Credit Card Survey showed that most small businesses are, in fact, using credit cards to help with business financing. While only 5% of small businesses used an SBA loan and 19% used no financing during the previous 12 months, 59% of small business respondents said they have utilized credit cards for their capital needs.

And the number of business credit cards may be surprising as well. While only 23% of small business owners who used credit cards used only one card, 77% used more than one, and even 23% used four or more credit cards.

The State of Business Credit

As far as overall debt, 34% of poll respondents said that 25% or more of their debt financing is from credit card debt. With that many business owners having credit card debt, it doesn't help when credit card companies change the rules. In fact, 79% said that their credit card terms have grown worse over the last 5 years.

When asked what changes have occurred to their credit card terms just from 2008 to 2009, 41% said their credit was reduced, 63% said the interest rate increased, and 23% said their interest switched from a fixed to a variable rate.

Unfortunately, small business owners seem to be trapped. Without the available capital from credit cards, 62% said they would be unable to expand or grow business operations, and 56% even said they would have to reduce the number of their employees.

Clearly, business credit cards might be an important element of your consistent business financing. Be sure you research the right cards and get the best terms, like the Discover business card which offers no annual fee, 5% cash back on all office supply purchases, and a smaller cash back for other purchases.

With good credit, you may be able to obtain very reasonable credit terms from almost any credit card company. If you find that credit cards are almost essential for your business financing needs, be sure you research the best card, and use them according to terms to avoid negative financial whiplash.