Small and micro businesses play an important role in countless communities, and many families depend on them for their livelihood. In fact, 50% of individuals – more than 70 million people in the US private workforce work for or run a small business. Unfortunately, many still struggle to make ends meet.
The Corporation for Enterprise Development (CFED), with support from the MasterCard Center for Inclusive Growth, explored the financial challenges they face and published a study titled In Search of Solid Ground: Understanding the Financial Vulnerabilities of Microbusiness Owners. Key findings show that:
- Their business and personal finances are often inextricably tied, and they are dealing with significant financial vulnerabilities beyond just access to credit;
- Many suffer from cash flow issues and can’t cover immediate business expenses leading to financial insecurity, both for their business and their households; and
- Young startups, less formal businesses, those generating lower household incomes for their owners, those with fewer employees and minority-owned businesses have an especially hard time accessing financial products, including credit, to minimize financial insecurity.
CFED & MasterCard joined PYMNTS.com to discuss the findings of this study and the use of credit cards among small and microbusinesses on a recent podcast.
A brief summary of the report can be found here.