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There may be a financial storm brewing at a key intersection on Main Street.

Roughly 35% of small-business owners in a survey said they’ve needed to tap their own funds — via a personal credit card and/or savings, for example — to help prop up their business in the months since the coronavirus whacked the U.S. economy, according to a new survey from CreditCards.com. Other sources serving as a lifeline included business credit cards or a business savings account, and loans (including through the Paycheck Protection Program, or PPP).

Altogether, 70% in the survey said they have leaned on one or more of those sources to remain in business since the coronavirus pandemic began.

“These are tough numbers,” said Ted Rossman, industry analyst for CreditCards.com. “They show just how dire this is for small businesses, and also how intertwined their personal and business finances are. 

“You kind of have to worry about some of them compromising their own financial well-being,” Rossman said.

The survey results, based on a poll of 500 small-business owners in mid-July, come as congressional lawmakers debate how best to help businesses (and households) that are struggling amid continuing economic uncertainty. An expansion of the PPP loans, as well as tweaks to the rules applying to their use and forgiveness, are among the provisions being considered for inclusion in the next coronavirus relief package.

Funding sources used by small businesses

(Respondents could select more than one answer.)
Personal credit cards 24%
Business credit cards 20%
Personal savings accounts 21%
Business savings accounts 24%
Paycheck Protection Program loan 30%
Other type of loan (non-PPP) 9%
None of these 30%

While those PPP loans can be forgiven if the money is used for certain expenses and follows other guidelines, the same can’t be said for some other sources.

Business credit cards, especially, come with what may surprise some owners: Depending on the terms of your “business” card, you may be personally responsible for any balance.

“It’s a bit of a misconception because these cards might give you better rewards on business stuff like office supplies or online advertising but in the end, they require a personal guarantee,” Rossman said. “So usually the owner ends up being on the hook personally.”

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Typically, he said, corporate credit cards that allow the company itself to guarantee the debt are given to businesses with at least $1 million in revenue. Otherwise, any balance on the card is usually the responsibility of the owner, even if the business closes permanently.

Meanwhile, 71% of small businesses say they have used up all of their PPP loan, according to a recent National Federation of Independent Business survey of its members.

“The longer this stretches on, the more help that will be needed,” Rossman said. “If there’s not substantial government stimulus, we’ll see a lot more businesses and consumers falling behind.”

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