Earlier this week, Intuit QuickBooks released a couple of economic focused reports.
New Credit Card Entrepreneurs Report
The new Intuit QuickBooks ‘Credit Card Entrepreneurs’ Report reveals which kinds of businesses have been most sensitive to higher interest since 2022, how they have been affected, and the critical role that credit cards play in small business growth. The new report was prepared by leading global economist Professor Akcigit.
When the Federal Funds Rate started to rise, credit cards provided businesses with much-needed flexibility and access to funds, supporting their growth and operations but at the risk of facing higher interest charges. The report identified multiple findings including:
The Connection Between Credit Card Financing and Small Business Growth
Since the federal rate increase in 2022, banks were not able to offer small businesses as much financing as they used to. As a result, some small businesses had 16% lower credit card balances, which ultimately slowed their ability to grow.
Small Businesses Unable to Pay Off their Monthly Credit Spend
Monthly credit card spending was high when the federal rate spiked - at $26,000 per small business. However, monthly repayments were only $24,000 per business, creating great risk for high interest payments.
Efficient Credit Card Financing Management Can Drive Growth
Better management of a small business’ credit card financing offers strong payoff. Data shows that these businesses had up to 4% higher employment growth and up to 30% higher revenue growth.
Post-Fed Spike Payment Behavior:
Small businesses reduced their credit card spending by 3.2% on average, but they made even larger reductions in their payments on credit card balances, increasing the risk of interest charges.
Interest charges increased by 60% and delinquencies increased by 27%, with nearly half of the rise in delinquencies stemming from the cumulative burden of higher credit card interest payments.
For more details you can access the new report HERE.
April Small Business Index Report
Also released was the Intuit QuickBooks April Small Business Index which indicated that while there were fewer jobs across each region, monthly revenue increased for most areas, which could possibly lead to more new job hires in the future or help small businesses make larger payments against credit card balances and delinquencies.
Use this official link for access to the full Small Business Index.