The business credit card boom: How small businesses are using credit to grow
One in five small businesses turn to credit cards to manage cashflow, highlighting a growing trend among entrepreneurs facing unpredictable income and rising expenses. While credit cards can offer flexibility and short-term relief, relying on them without a strategy can quickly spiral into high-interest debt and financial strain.
The good news? Uswitch credit card experts have looked into the latest statistics on business credit cards in the UK, and explained how the right approach can be a strategic move and sustainable strategy, through which small businesses can leverage credit to fuel growth.
Business credit card adoption rates and growth
Approximately 1 in 5 (20%) small and medium-sized enterprises (SMEs) in the UK utilised business credit cards as a form of external finance in Q3 2023.[4]
The British Business Bank found in its annual tracker that external finance (including credit cards, bank loans and overdrafts) usage rose last year by 10% (from 36% to 46%) from post Covid-era lows. The rise was driven by a strong increase in the use of credit cards, with demand for bank loans declining.[5]
Uswitch SME expert Andy Elder says: “For SMEs, credit cards can be a more practical financing tool than bank loans — offering quicker access to funds, more flexible repayment, and less paperwork, while bank loans are often harder to qualify for, slower to process, and come with strict terms that don’t always match a small business’s cash flow.”
Spending and usage trends
The average credit limit on a business credit card tends to be higher than it is for personal credit cards. With an average financial standing, an SME can expect to be offered between £1,000 and £10,000. But if your financial history indicates that you’re an extremely reliable business to lend to, you could be offered five times this amount, or even more.
This underscores the importance of budgeting tools, and setting limits on credit usage for employees, so spending can be actively managed to avoid surprises.
The table below shows the most common uses of credit cards for SMEs: [6] [7]
Category | Common Uses |
Day-to-Day Operational Expenses | – Travel & accommodation (flights, hotels, trains) – Fuel for company vehicles – Office supplies (stationery, tech accessories) – Software subscriptions (Microsoft 365, Adobe, etc.) |
Business Development | – Online advertising (Google Ads, Facebook, LinkedIn) – Client entertainment (meals, events) – Conferences and staff training |
Capital or Equipment Purchases | – Technology (laptops, phones, tablets) – Machinery or tools for operations |
Cash Flow Management | – Paying suppliers or contractors during tight periods – Covering unexpected costs or seasonal slowdowns |
The percentage of small businesses in the UK that pay their business credit card balances in full varies by company size:[2]
Micro Companies (fewer than 10 employees): Approximately 84% clear their credit card balances monthly.
Small Businesses(10-49 employees): Around 94% pay off their balances in full each month.
These trends suggest that a significant proportion of small businesses manage to pay their credit card balances in full, rendering them a sustainable tool for growth to the vast majority.
Challenges and risks
There are of course some challenges and risks associated with credit cards, especially in the current economic climate:
Businesses struggling with higher interest rates
Approximately 14% of SMEs using finance expressed concerns about repaying their borrowing in Q2 2024, equating to 5% of all SMEs.[9]
This isn’t a significant amount on the whole, indicating that most SMEs feel that they have a good handle on their current borrowing. Business owners should avoid over borrowing and make sure they budget accordingly, to ensure that their debt remains manageable.
The impact of late payments on business credit scores
Whilst it’s true that late payments can negatively affect business credit scores, as long as SME owners are diligent about how much they borrow, they can avoid late payments hence protecting their credit scores.
Comparison of top business credit cards
You can find Uswitch comparisons of business credit cards here, to help you make an informed decision on which one is right for your business.
Furthermore, Andy Elder, Uswitch business credit card expert, has given his top tips below on how small businesses can use credit cards strategically to support growth while avoiding the debt trap:
1. Choose the Right Card for Your Business Needs
“Not all business credit cards are created equal. Look for cards that align with your spending habits — whether that’s cashback on office supplies or points for business travel. Cards with no annual fees and flexible payment options can also be advantageous.”
2. Use 0% Intro APR Offers Wisely
“Many business credit cards offer a 0% APR period for purchases or balance transfers. This can be a smart way to finance short-term investments — like new equipment or marketing campaigns — without immediately accruing interest. Just be sure to have a plan to pay off the balance before the intro period ends.”
3. Always Pay on Time and More Than the Minimum
“Missing payments or only making the minimum payment can lead to high-interest charges and damage your business credit score. Set up automatic payments or calendar reminders to stay on track, and aim to pay the balance in full each month when possible.”
4. Separate Business and Personal Finances
“Using a dedicated business credit card keeps expenses organised, simplifies bookkeeping, and helps build your business credit profile. Separating your business and personal finances in this way also protects your personal credit in case your business hits a rough patch.”
5. Monitor Your Spending and Set Limits
“Use budgeting tools or credit card apps to track expenses in real time. Many business cards allow you to set spending limits for employee cards, which can help you stay within budget and avoid surprises.”
6. Leverage Rewards to Reinvest
“Use earned points, miles, or cashback to offset future business costs like travel, supplies, or advertising. Think of rewards as a way to stretch every penny further and reinvest in growth.”
7. Build and Maintain a Strong Business Credit Score
“Using your credit card responsibly helps establish a solid credit history, which can open doors to better financing options in the future — like business loans with lower interest rates.”