1-In-5 Small Biz Owners Don’t Use Any Credit

The Dallas Morning News reports that a survey released by the U.S. Small Business Administration Office of Advocacy says one in five small businesses nationwide don’t use any form of credit at all.

The results are consistent with similar reports done in 2003, 1998 and 1933.

Such firms are significantly smaller, more profitable, more liquid and more creditworthy than firms that use some form of credit, the report said. They also tend to be in the service, retail and wholesale trade industries.

Most firms in the survey – 40 percent – use both bank credit and trade credit (buying goods or services on an account without an immediate cash payment). Those firms tend to be larger.

The 20 percent of firms that use bank credit only tend to be less profitable and less liquid. And the 20 percent of firms that use trade credit only are more liquid, but less creditworthy.

Photo by LotusHead.

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