Finder.com analysed figures by the BVA to find that just over 600,000 small and medium enterprises (SMEs) are using business credit cards, out of a total of 5.5 million. This means that 9 in 10 SMEs (89%) could be missing out on the benefits offered by business credit cards. 

While 18% of SMEs were using business credit cards in 2019, more than 1 million SMEs, this had lowered to just 11% in 2022.

Credit card applications also made up just 5% of external financing applications by SMEs between July 2021 and December 2022, a far less popular option than bank loans, which made up 50% of applications. 

Why aren’t many businesses using credit cards?

Figures show that 95% of SMEs have between 0 and 9 employees. These micro businesses may prefer to use personal funds to free up cash flow, rather than risking taking on too much debt.  

SMEs might also be put off using a business credit card due to the steep interest charges that can quickly add up if you don’t make repayments promptly. Those businesses who are wary of getting into debt may not consider a business credit card to be the right option for them, as is common for 9 in 10 SMEs. 

However, having a business credit card can be advantageous for small businesses, especially those who wish to build their business credit score. 

Commenting on the statistics, Emily Herring, credit expert at finder.com, explains why small businesses could be missing out:

“Some small businesses are wary about signing up for a business credit card, but if you’re responsible with how you use these cards, they can offer important benefits for SMEs. Here's a list of the key ones:

Boost your business credit score. If you have a limited credit history or a poor business credit score, a business credit card could help you build this. You’ll need to make repayments on time and keep a low credit utilisation ratio, which is the percentage of credit you're using of all the credit available to you.

Earn rewards and other perks. Many business credit cards and charge cards offer attractive rewards and cashback, allowing you to earn benefits so you can treat your team or your clients. Some rewards cards also allow you to earn air miles, to help make business trips more affordable. And some offer a welcome or sign-up bonus for new customers.

Keep personal and business finances separate. If you keep all business-related expenses on your business credit card, it could be much easier to track them and fill out any necessary tax returns or financial forms.

Control spending and improve cash flow. You can typically get a certain number of additional credit cards at no extra cost for your employees to use, which allows you to monitor spending and even set spending limits.

"These benefits might make business credit cards more appealing to SMEs - just keep in mind that you need to be responsible with managing your finances and paying back balances in full each month, or you can quickly rack up debt that cancels out any benefits."