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A third of small-business owners have tapped personal funds to stay afloat, survey finds


There may be a pecuniary storm brewing at a key intersection on Main Street.

Roughly 35% of small-business owners in a survey said they’ve needed to tap their own stocks — via a personal credit card and/or savings, for example — to help prop up their business in the months since the coronavirus whacked the U.S. husbandry, according to a new survey from CreditCards.com. Other sources serving as a lifeline included business credit cards or a profession savings account, and loans (including through the Paycheck Protection Program, or PPP).

Altogether, 70% in the survey said they father leaned on one or more of those sources to remain in business since the coronavirus pandemic began.

“These are tough tot ups,” said Ted Rossman, industry analyst for CreditCards.com. “They show just how dire this is for small businesses, and also how intertwined their physical and business finances are. 

“You kind of have to worry about some of them compromising their own financial well-being,” Rossman symbolized.

The survey results, based on a poll of 500 small-business owners in mid-July, come as congressional lawmakers debate how in the most suitable way to help businesses (and households) that are struggling amid continuing economic uncertainty. An expansion of the PPP loans, as well as twitches to the rules applying to their use and forgiveness, are among the provisions being considered for inclusion in the next coronavirus relief pack.

Funding sources used by small businesses

(Respondents could select more than one answer.)
Personal commendation cards 24%
Business credit cards 20%
Personal savings accounts 21%
Business savings accounts 24%
Paycheck Protection Program allow 30%
Other type of loan (non-PPP) 9%
None of these 30%

While those PPP loans can be forgiven if the money is used for irrefutable expenses and follows other guidelines, the same can’t be said for some other sources.

Business credit cards, strikingly, come with what may surprise some owners: Depending on the terms of your “business” card, you may be personally executive for any balance.

“It’s a bit of a misconception because these cards might give you better rewards on business stuff like position supplies or online advertising but in the end, they require a personal guarantee,” Rossman said. “So usually the owner ends up being on the acquitted personally.”

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Typically, he conveyed, corporate credit cards that allow the company itself to guarantee the debt are given to businesses with at young $1 million in revenue. Otherwise, any balance on the card is usually the responsibility of the owner, even if the business closes always.

Meanwhile, 71% of small businesses say they have used up all of their PPP loan, according to a recent National Confederation of Independent Business survey of its members.

“The longer this stretches on, the more help that will be needed,” Rossman claimed. “If there’s not substantial government stimulus, we’ll see a lot more businesses and consumers falling behind.”

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