A new survey from Bluevine reveals that many small business owners have gaps in their business financial knowledge, making it difficult for them to be approved for loans. More than 1 in 3 small and medium-sized business owners have applied for business credit or a term loan but experienced issues with their most recent financing application.
Knowledge Gaps and Financing Applications
Roughly two-thirds of small business owners applied for a business line of credit or term loan in the past 12 months, but 37% of all owners surveyed ran into a problem in their most recent business financing application. These problems largely revolve around not knowing enough about the application process or being surprised by their financial situation.
The survey shows that 75% of small business owners have used personal credit cards or personal loans for business expenses at some point in the last 12 months. This is a significant jump from just a few years ago, when 49% of small business owners said they used their personal credit cards for business expenses in 2024.
Risks of Using Personal Credit for Business Expenses
Using personal credit cards or loans for business expenses can create risk beyond utilization, according to Aditya Narula, Bluevine senior vice president and general manager of lending and credit. It can blur personal and business finances, limit the owner’s ability to build business credit, and make tax or cash-flow tracking harder.
To avoid these risks, small business owners are advised to maintain a strict separation between their personal finances and their business finances. This can be achieved by paying themselves a salary, as if they were an employee, and using business credit cards or loans for business expenses.
The survey also highlights the importance of researching lenders and checking credit scores before applying for a business loan. Only 49% of small business owners know their current business credit score, and some are not even familiar with the concept of a business credit score.
Original reporting: KTVZ (Central Oregon) — read the source article.
