Small Businesses Need Credit

Small businesses are the backbone of the American economy. They represent 99% of U.S. businesses, employ over 60 million Americans, and account for upwards of 40% of the nation's GDP. Access to credit is core to these enterprises' success. Whether buying new equipment or expanding into a new market, small business owners rely on credit to keep the economy vibrant.

Building means borrowing

When the Federal Reserve surveyed small businesses in 2025, over a third said they applied for a new loan, line of credit, or cash advance during the prior 12 months. Of those applications, nearly 80% were approved in part or in full.

Federal Reserve Vice Chair for Supervision Michelle Bowman recently emphasized the importance of these loans, noting that "ensuring the availability of credit to support [small businesses] is critical for a healthy labor market and for economic growth." Without a strong credit market that allows small businesses to grow, the whole economy suffers.

From large loans to credit cards, every scale of credit matters

The image of a small business owner applying for a loan to open a new storefront is quintessentially American. But all credit is crucial. University of Chicago researchers recently found that 55% of businesses used credit cards for company financing during the prior year.

• The researchers went on to note that "entrepreneurs particularly value credit card financing for its accessibility and flexibility in managing cash flow shocks. Younger firms, smaller firms, and those with lower cash reserves consistently allocate a larger share of their payments to credit card financing."
• In short, low-barrier credit gives young and growing enterprises the flexibility to adapt and expand.
  

Credit is the lifeblood of small businesses

Access to credit helps make growth possible. It gives entrepreneurs the flexibility to manage cash flow, cover unexpected costs, invest in expansion, and keep serving their customers even when conditions change. When credit is affordable and accessible, small businesses have more room to grow, communities have more opportunities to thrive, and the economy is stronger for it.

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