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Generally, there are two main levers that your business can pull to affect growth metrics: 1) customer acquisition, meaning bringing new shoppers through the door, and 2) customer retention, meaning keeping your old shoppers from exiting that door. 

Each is a necessary component of business growth, but which is more cost-effective—and which should you prioritize for your small business?

It’s long been reported that customer retention has a higher ROI. But is that actually the case? Here, I explore the evidence to dissect which is actually more cost-effective—customer retention or customer acquisition. 

Customer acquisition vs. retention: Fact-checking the numbers

“Obviously, customer acquisition,” you say, because you’re not new to business. Everyone has seen the stat that it costs 5X more to get a new customer than to keep an existing one…

Stat #1: It costs 5x more to get a new customer than to keep an existing one…

That’s a great stat! But have you ever tried to find the source? Go ahead, Google it and you’ll be clicking around dozens of articles and infographics that cite each other, but you’ll probably never find the actual report or survey where that 5X stat originated.

I’ll save you some time: The statistic goes back to a report put out by Lee Resources in 2010. The report itself, I can’t find online. And Lee Resources’ only social media presence, Twitter/X, last chirped in 2013. Their Facebook page no longer exists. 

Their oft-cited stat of customer acquisition being 5X more costly than retention may be absolutely right—but there’s no way of knowing without seeing the actual report.

Stat #2: An increase in customer retention leads to larger increases in company profits…

According to Bain & Company, “a 5% increase in customer retention increases company profits from 25% to 95%.” That’s incredible!

But, have you tried to find the source of this one? I have. Sites usually link back to this short brief by Fred Reichheld. Unfortunately, the “95% increase in profit” is not in these 3 pages. The “25% increase in profit” is there, but a) there’s no actual study/survey reported, and b) it’s only referring to financial services.

The real source of this statistic is actually a paper by Reichheld and W. Earl Sasser, Jr. titled “Zero Defections: Quality Comes to Services.”

There are a few things you should know about this paper:

1. There really is a statistic fairly close to the “95% profit” cited above: “Reducing defections by just 5% generated 85% more profits in one bank’s branch system…” So to restate, this profit increase was seen in a single bank.
2. This paper was published in 1990. Over 32 years ago and the same year Tim Berners-Lee invented something called the World Wide Web.

This stat might not be completely applicable to e-commerce—something that hadn’t been invented yet.

If anything is clear, it's that these oft-stated references should be taken with a grain of salt.

Customer retention won’t always have a higher ROI

So what was the point of this exercise in fact-checking? It isn’t so obvious that the ROI of customer retention is always more than the ROI of customer acquisition. It varies by industry, by company, and even down to the types of marketing & sales tactics that your business employs.

Customer acquisition vs. retention: What to consider

When answering the question of which is better—customer retention or acquisition— the real answer is, it depends. On many factors, in fact, including, but not limited to the following:

• Your production costs vs. operational costs
• Your product type
• Your average contract type and size
• What stage of growth your company is in
• How good your tracking data is 
• The macro-environment and industry at large

Think about it logically in the context of the timeline of a company’s growth:

Retaining customers at the start of the growth curve may indeed be more cost-efficient, but it can’t be better for the success of your nascent company. New customer acquisition is overwhelmingly important at this stage in the life cycle. 

On the opposite end, retention is key when a company has matured and has a large base of customers to keep and nurture.

It depends on the business itself.

Consideration #1: Do you offer products or services? And what of what kind?

Retention is a great idea, but what if your business largely produces products that last a lifetime? Think well-made cast iron skillets and Christmas tree stands; items that the average customer will only need to buy once or twice forever.

Maybe you offer services of some kind—whether digital or physical. Retention is going to be a much more important factor in growth.

Consideration #2: What size and kind of contracts are you working with?

Contract type is also very important to consider. Subscription businesses might favor retention more heavily, as well as companies with long sales cycles, say 3 or more months.

Consideration #3: What stage of growth is your company in? 

If you have a young business that is growing rapidly, you might favor acquisition (at least temporarily).

There's also a good chance you don't have reliable retention data yet.

Customer retention attribution is much harder to capture accurately versus acquisition. This can make it hard to proof your own ROI. Do you have reliable retention data that you can trust to base future growth decisions on?

Consideration #4: What does the macro environment look like?

You cannot ignore the state of the industry and economy when deciding whether to prioritize acquisition or retention.

If you offer a service, during a recession, your focus on retention will likely need to grow.

The spending decisions of your customer base shift largely with the macro environment. So should your growth tactic.

One last consideration…

How about one last practical thought experiment: say you want to double your business. 

Would it be easier to get every single one of your customers to double their spend, or double the size of your customer base? Suddenly, the obvious answer may not be so obvious for your business anymore.

The final verdict

It’s more important to track your business marketing & sales expenses accurately than to rely on “conventional wisdom” that might not actually be accurate to your business. 

By understanding your finances, you can calculate your own ROI on acquisition vs. retention, giving you much better data to work off on moving forward.

Perhaps the best and most important growth metric of all? Customer Lifetime Value (LTV).

In an ideal world, you’re always going to prioritize the customer (new or existing) with the highest customer lifetime value.

Customer Lifetime Value (CLV): The most important metric

I quite like this Forbes article that touched on the silliness of that 5X statistic much like I did:

Consider what Wharton Marketing Professor Peter Fader told me in an email interview: “Here’s my take on that old belief: who cares? Decisions about customer acquisition, retention and development shouldn’t be driven by cost considerations—they should be based on future value.”

Fader added, “If we could see CLV as clearly as costs, all firms would get this. But because costs are so tangible and CLVs are a mere prediction, it’s really hard to get firms to adopt this mindset.

CLV is an important statistic for your business to really get right to answer the retention vs. acquisition question.

While CLV should always be improving (which means your business is becoming more “sticky” and loyalty is increasing), it may not be big enough to sacrifice acquisition spend. Alternatively, if your CLV is great due to your churn rate being so low, then retention is already doing well and the focus should be on acquisition.

At the end of the day, no generic statistic should drive the direction of your business.

*******

Disclaimer:

The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. Any content provided by our authors are of their opinion and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything.

The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter. 

Starting a small business is an exciting venture, filled with dreams of success and the desire for autonomy. However, the stark reality is that not all businesses survive the test of time. According to the U.S. Bureau of Labor Statistics (BLS), about 24.2% of U.S. businesses fail within their first year of operation. Understanding the factors contributing to these survival rates can help aspiring entrepreneurs prepare better and increase their chances of longevity in a competitive landscape.

Lendio looked at state and industry data to determine what factors can contribute to a business's success or failure.

Key findings

• The longer a business is in operation, the higher the failure rate. BLS data shows that approximately 24.2% of small businesses do not survive their first year. However, that number grows the longer businesses are in operation. After five years, 48% have failed, and 65.3% have failed at the 10-year mark.
• Business failure rates are higher for specific industries. Nearly 25% of businesses in the transportation and warehousing industry fail within the first year. The mining, quarrying, oil and gas extraction and information industries follow closely behind with 24% of their businesses failing in the first year. This trend may be attributed to various challenges, including fluctuating demand, rising operational costs, and intense competition within these sectors. Companies must navigate logistical complexities and maintain efficiency to survive, making it crucial for entrepreneurs in these industries to develop robust strategic plans.
• The West Coast sees both the highest and lowest business failure rates within the first year. Washington state has the highest failure rate, with 40.8% of its businesses failing in the first year. Conversely, California has the lowest failure rate within the first year, with 18.5% of its businesses failing within the first year.

The statistics at a glance.

The statistics around small business survival can be sobering. Approximately 24.2% of private sector businesses in the U.S. fail within their first year of operation. Unfortunately, the trend does not improve much over time; after five years, nearly half—48.5%—have faltered, and after a decade, about 65.1% of businesses have closed their doors for good. These figures highlight the fiercely competitive environment small businesses face and the various challenges that can impact their viability.

Geographic variations in failure rates.

Interestingly, there are notable geographical differences in business survival rates across the United States. Washington State has the highest business failure rate within the first year, with a staggering 40.8% of businesses not making it past this critical milestone. Following closely behind are the District of Columbia at 32.2% and Idaho at 30.7%.

On the contrary, California boasts the lowest business failure rate within the first year, with only 18.5% of businesses failing. Kentucky is just behind at 18.8%, and Massachusetts follows at 19.2%.

However, entrepreneurs should not let this data discourage them. A closer look at the data reveals that a significant number of locations exhibit below-average failure rates, indicating pockets of resilience among small businesses. Specifically, 32 out of the 51 locations examined for this piece boast lower-than-average one-year failure rates, suggesting that many entrepreneurs in these areas benefit from supportive ecosystems.

23 locations maintain below-average five-year failure rates, showcasing their ability to weather initial challenges and sustain growth over time.

Impressively, 24 of the locations also enjoy below-average ten-year failure rates, highlighting long-term viability and the significance of local conditions in nurturing successful business ventures.

The environment in which a business operates can significantly influence its chances of survival. In fact, according to a study by Lendio, environmental factors such as access to funding, tax incentives, and a flourishing local economy can significantly enhance business's chances of survival and success in different states. By selecting a location that aligns with their business goals and provides the necessary resources, aspiring entrepreneurs can create a stronger foundation for long-term viability and growth.

Industry-specific challenges.

Beyond geographical factors, the industry in which a business operates also plays a crucial role in its survival.

Industries with lower survival rates

The transportation and warehousing industry is particularly challenging, with a failure rate of 24.8% within the first year. This figure is closely followed by the mining, quarrying, and oil and gas extraction industry at 24.4% and the information industry at 24.1%. These industries often face unique obstacles, from fluctuating demand to regulatory pressures, making it essential for entrepreneurs to understand the intricacies of their chosen field.

Industries with higher survival rates

Conversely, certain industries demonstrate significantly higher survival rates within their first year of operation. For instance, businesses in the retail trade sector have a low failure rate of just 12.9% in their first year. Similarly, the accommodation and food services industry shows a solid survival rate, with just 14.2% of businesses failing within their first year. The agriculture, forestry, fishing, and hunting industry also presents encouraging statistics with a failure rate of just 15.1%. These figures suggest that businesses in these industries may benefit from more stable demand or fewer operational hurdles, contributing to their advanced longevity.

When selecting an industry for a new business venture, it’s essential to consider not only the initial survival rates but also the long-term viability of that sector. While industries like retail and accommodation may show promising survival rates in their first year, it’s important to assess trends over a longer timeframe. For instance, the food industry, despite often having a solid start, can face challenges related to saturation, changing consumer preferences, and increasing competition, which might impact longevity. A comprehensive assessment of both short-term and long-term survival statistics will help entrepreneurs make informed decisions, ensuring they choose a path that not only offers immediate success but also sustainable growth in the years to come.

Recent trends and influencing factors.

It's worth noting that the 1-year business failure rate has jumped by at least two percentage points for two consecutive years. This increase can be attributed to several factors, including various economic pressures. Businesses should be adaptable and resilient to help stay afloat during difficult times.

The business failure rates for the past three years are as follows:

• March 2020 - March 2021: 18.4% failure rate
• March 2021 - March 2022: 20.8% failure rate
• March 2022 - March 2023: 24.2% failure rate

Economic pressures can significantly influence a small business's chance of survival, affecting everything from cash flow to consumer spending. During periods of inflation, for instance, the rising costs of materials and services can squeeze profit margins, ultimately making it harder for a business to stay afloat. When expenses increase, many small businesses are forced to make tough decisions, whether that means raising prices, cutting costs, or even reducing staff. These changes can directly impact customer satisfaction and loyalty, leading to a decline in sales.

Additionally, economic downturns can lead to reduced consumer confidence. When individuals are uncertain about their financial future, they are less likely to spend, which means businesses may experience a dip in sales. This is particularly challenging for startups or small businesses that rely heavily on consistent sales to sustain operations.

Additionally, access to financing becomes more difficult during economic struggles, as lenders tighten their criteria for loans. As a result, small businesses may find themselves grappling with insufficient working capital, making it a challenge to cover day-to-day operational costs or invest in growth opportunities. Understanding these economic dynamics is crucial for entrepreneurs aiming to enhance their resilience and sustainability in an unpredictable market.

How businesses can build a strong foundation for success.

Given these statistics, aspiring entrepreneurs must recognize the importance of building a strong foundation for their businesses. Here are some strategies that can help increase survival rates:

1. Market research. Understanding the market landscape, customer needs, and industry trends is crucial for business planning. Thorough market research can help entrepreneurs mitigate risks by ensuring they address the real demands that businesses within their respective industries face.
2. Financial planning. Sound financial practices are essential. Businesses should maintain a clear budget, monitor cash flow, and prepare for unforeseen expenses to avoid financial pitfalls.
3. Flexible business models. Being adaptable and willing to pivot in response to market changes can make a significant difference in a business's longevity. This might involve diversifying service offerings or exploring new customer segments.
4. Networking and support. Joining local business networks and seeking mentorship can provide invaluable resources and support. Learning from others' experiences can offer insights into avoiding common pitfalls.
5. Staying informed. Keeping on top of economic trends, consumer preferences, and industry developments can help businesses remain competitive. This proactive approach can foster innovation and allow businesses to adapt to changes more effectively.

Conclusion

While the statistics on small business survival rates may appear daunting, they also serve as a call to action for entrepreneurs. By understanding the factors that contribute to business failure and implementing strategic practices to counter them, aspiring business owners can improve their chances of success. The road may be rocky, but with careful planning, resilience, and adaptability, the dream of owning a thriving business can indeed become a reality.

Small businesses play a vital role in the economy, accounting for a significant portion of job creation and economic growth. However, starting and running a small business can be challenging, with numerous factors impacting success. By understanding the latest trends and insights on small business statistics, entrepreneurs and business owners can gain valuable insights into the current state of the small business landscape and develop effective strategies to thrive. 

In this blog post, we will explore key statistics on small businesses, including sentiment, funding sources, and common challenges.

Growth and revenue

Small business growth and revenue statistics.

• There are 33.3 million small businesses in the United States.
• 5.5 million new business applications were filed in 2023 continuing a surge in small business growth since the pandemic. (U.S. Census Bureau)
• Small businesses make up 99% of all U.S. companies.
• Small businesses employ 61.6 million people and nearly 46% of all private-sector workers.
• Small businesses saw a gross revenue of $13.3 trillion annually.
• The number of businesses owned by Black, Hispanic, and Asian Americans has increased by more than 50% from 2007 to 2020.
• The most common industries to start a business include retail, professional services, and construction.

Small business owners

Who owns small businesses?

• 63% of employer firms are owned by men.
• In total, women own 13.8 million businesses employing 10 million workers and generating $3.9 trillion in revenue across the U.S. 
• There are an estimated 3.7 million Black-owned businesses in the United States and an estimated 161,422 Black-owned businesses with at least one employee in the United States.
• Veterans own 8.1% of businesses. (SBA)
  

Small business sentiment

Small business owners’ sentiment statistics.

• 49% of small business owners believe it’s somewhat or much harder to achieve the dream of owning a small business than in the past. 33% of SMB owners believe it is somewhat or much easier. 19% say it’s about the same.
• 89% of small business owners believe it’s possible to attain the goal of owning your own business.
• The Mid-Atlantic region (New York, New Jersey, and Pennsylvania) had the most positive sentiment toward being able to start a business, with 96% of respondents believing it’s possible.
• The East South Central region (Kentucky, Tennessee, Alabama, and Mississippi) had the most negative sentiment, with 30% of respondents stating they didn’t believe it was possible to obtain the goal of owning their own business. 

Source: Lendio

Small business challenges

Small business owners’ challenges statistics.

• 41% of small business owners state their number one challenge is related to the economy and inflation, with another 14% struggling most with financial concerns.
• Hiring remains the No. 1 challenge for 11% of small business owners, while COVID recovery vexes 4.5% of business owners and supply chain issues 3.4% of SMB owners.
• 56% of small businesses state that large corporations have a negative impact on growth opportunities for their businesses.

• 66% of small business owners state having a financial safety net would have had the most impact on their ability to start a business, followed by access to capital at 53%. 
• 24.2% of new businesses fail within the first year. (BLS)
• Of the respondents, 52% state that living in an area with lower business costs and a lower cost of living would be helpful. 44% state lower taxes would have a positive impact. 
• 33% state more customers and resources, 26% state less cultural bias, and 32% state access to educational resources and guidance would have had an impact on their ability to start a business.

Source: Lendio

Small business funding

Small business funding statistics.

• 54% of SMB owners started their business with personal funds, with another 12% relying on friends and family. 14% used a bank loan, 3% an online lender, 3% venture capital, 3% crowdfunding, and 4% credit cards.
• 79% of SMB owners needed less than $100,000 to start their business, while 43% needed less than $10,000.
• The average loan amount for a small business owner is $47,000.*
• A small business has a median of five employees when it is first funded by an outside lender.*
• A small business has been in business for about three years (a median of 40 months) when it is first funded by an outside lender.*
• Minorities received 32% of SBA 7(a) loans and 30% of SBA 504 loans in 2023.

*Based on internal Lendio data of 300,000+ loans funded since 2013.

Source: Lendio

Generational differences

Small business owner generational differences statistics.

• Those under the age of 45 report needing more money to start their business, with 23% needing $100K to $250K. In contrast, only 10% of those aged 45+ needed that amount.
• While both generations rely heavily on personal funds to start their businesses, those under the age of 45 have started to turn to alternative sources, such as crowdfunding (6%) and online lenders (5%).

• 46% of younger business owners (18-44) believe owning a small business is somewhat or much easier to achieve. 
• 58% of older business owners (45+) believe owning a small business is somewhat or much harder to achieve.
• While a large majority (71%) of SMB owners aged 18-44 believe large corporations have a negative impact on growth opportunities for their business, 57% of those 45+ disagree, stating large corporations don’t have a negative impact on their business.
• While the generations agree that a financial safety net, access to capital, and low costs are most critical to success, those 44 and younger place greater importance on access to educational resources and see cultural bias as a larger inhibitor. 
• Both generations agree that the freedom to live how you want is the most important component of the American dream. Perhaps unsurprisingly, those 45+ place greater importance on retirement (46%), while those under 45 place more importance on becoming wealthy (36%).

Source: Lendio

One of the most important questions you need to answer as a small business owner is whether you should incorporate your business—and if so, how. 

Here, we’ll explore why you would want to incorporate your business, and how to do so, with helpful links to resources across different U.S. states.

About business incorporation

What does “incorporated” mean? 

It’s the process of converting a sole proprietorship or general partnership into a separate entity in the eyes of the law (i.e. the state you're operating in) and the public. 

In other words, by incorporating your business, it becomes a separate legal entity from you, the business owner, or any other individual involved.

Is incorporation right for you?

The setup itself involves fees and plenty of hoop jumping. More importantly, it introduces extra guardrails and responsibilities for your business. The benefits, however, often outweigh these costs.

“The first thing you’ll need to consider before incorporating is whether structuring your business as a corporation is the best way to serve your vision for your company,” explains a business structure analysis from Forbes. “There are 4 major business structures available to you. Have you carefully considered the pros and cons of each? Corporate structure is attractive if you’re interested in issuing shares in your business, you are anticipating a rapid and far-reaching expansion of your enterprise, and/or your vision is best served by a rigid managerial hierarchy.”

What are your business goals? Keep them in mind as you read through the rest of this post. It’ll help you gauge whether you should incorporate, or go with another structure such as a partnership or a limited partnership.

That brings us to our next question: If you are planning on incorporating your business, should you classify it as an S corp or a C corp?

S corp vs. C corp

When incorporating your business, you can do so as an S Corporation or a Corporation.

A C corp is the more standard incorporation, while an S corp comes with specific tax advantages. C corps pay corporate-level federal taxes, while S corps do not—their taxes are instead passed down to shareholders.

That is the primary difference between S and C corps—how they are taxed.

When determining which is better for you, there are two main factors to keep in mind:

• S corps come with more tax advantages for small businesses, but with that, come with more limitations.
• Owners of a C corp are subject to double taxation (at the corporate level and then at the personal income level) but come with no limitations.

If you own a small business and don't see it growing beyond 100 shareholders, an S corp is likely the right option.

If you're fond of catering to unlimited growth, a C corp is likely the better option.Thomson Reuters provides an in-depth breakdown of S and C corp pros and cons to help you determine which is right for your business.

How to incorporate a small business

If you decide that incorporation is your best route, you’ll need to follow a strict process to make it happen. There is no universal checklist available, as the details vary from state to state. But here are some of the key steps that nearly all entrepreneurs will need to accomplish in order to become the proud owner of an incorporated business.

1. Choose a Business Name

It’s essential to find a name that isn’t just memorable and effective, but available. Visit your state’s online database to make sure that your preferred name hasn’t already been taken. Review the U.S. Patent and Trademark database as well to check on any overlapping trademarks.
Typically, you can search your state, plus either “business entity search” or “corporation search,” and you’ll find the necessary search tool to look up existing businesses in your state.

Example corporation search pages:

• Delaware corporation search
• Florida corporation search
• California corporation search
• PA corporation search
• Illinois corporation search
• Texas corporation search
• New York corporation search
• MA Corporation search
• Utah business entity search

2. Set up governing documents

This step is where you create the road map for how your business will handle its business. You often aren’t required to submit these documents to the state, but they’re essential when it comes to things like handling profits or navigating disputes.

You can pay an attorney to help with your governing documents, but the most cost-effective route is to use one of the free bylaw templates that you can find online.

3. Make it official with paperwork 

Here’s where you let the state know what you want your business to be called, as well as contextual information such as the business’s purpose, directors, officers, and mailing address.

Most states allow you to file your articles of incorporation online. You can also print off hard copies and then submit them by mail, but this approach will always take longer. Once everything has been reviewed and approved, you’ll receive a confirmation from the state that your business is now its own legal entity.

Similar to an entity search, you can simply search your state, plus “articles of incorporation,” and you’ll find the documentation you need.

Articles of incorporation by state:

• California articles of incorporation
• Illinois articles of incorporation
• Texas articles of incorporation
• Florida articles of incorporation
• PA articles of incorporation
• Georgia articles of incorporation
• New York articles of incorporation

4. Gather for a meeting 

Once your articles of incorporation have been approved, you must hold a formal meeting. A top priority of this event is to record information on how your business was funded. This means the names of each person must be written down and the percentage of their ownership noted.

Be sure that you don’t conclude the meeting without also getting everyone to sign the business’s bylaws. If you have any resolutions to bring to the group, this is also the time to get them approved.

5. Secure an EIN 

Even if your business has no employees, it likely needs an Employee Identification Number (EIN). You can learn more about EIN requirements and easily apply for your own by visiting this application page created by the IRS.

As mentioned earlier, your state may have some other unique requirements for incorporation. But once you’ve completed these 5 steps, you’ll be ready to start enjoying the benefits of incorporation.

The benefits of incorporating your small business

Let’s look at some of the primary perks of incorporating your small business:

Protecting your personal assets 

Since your business is declared as its own legal entity, your personal assets are protected in the case of any legal or financial issues. If assets were to be claimed at any point, it would only be the business’ assets, not the owner’s.

Establishing business credit 

There’s now a clear delineation between your personal finances and business finances. That separation helps your business begin its own credit history rather than being attached to your personal credit history.

Raising capital easier 

You’ll be able to issue shares of company stock to potential investors that you otherwise wouldn’t have access to as a sole proprietorship. Also, banks typically prefer to lend to an incorporated company over sole proprietors.

Building credibility with customers and community 

Say you did business with a company and they needed to give you a check. You look at that check and see that it’s from the CEO’s personal account and bears their personal information. How professional do you think that company is now? When you incorporate your business, you’re proving your credibility and professionalism as a business entity—and communicating your business intentions, even if in a non-direct way.

Incorporation can lead to success

Taking the time to incorporate your business could help you immensely in the long run. Weigh your options and then take the necessary steps to become the type of business you want to be. It may take some time and effort to complete the process, but you’ll be glad you did.

Every small business owner looking for financing should understand the fundamental differences between a business line of credit and a term business loan. 

Both types of financing can be useful, but they do serve slightly different business needs. Applying for the right type of capital at the right time ensures that you don’t run into any problems down the road—or create more problems down the road.

Here, we’ll look at term loans and lines of credit, the requirements, benefits, and drawbacks of each, to help you determine which is the right option for your small business.

What is a business term loan?

A term loan is a fixed funding transaction. It is a one-time loan based on the current cash flow of your business (often plus collateral that you pledge to secure the loan). 

With a term loan, all of the proceeds are available at the time of closing. The lender bases your payments, interest, and principal on the amortized loan terms. For example, your business might take out a $100,000 loan at an 8% fixed interest rate over a 5-year term. Interest rates and monthly payments on term loans are generally fixed for the life of the loan. 

If your term loan is secured (many are), the bank will assume an ownership position on the collateral you offer. This means you cannot transfer or liquidate the collateral you use to secure the term loan until you make the final loan payment.

The typical use for a term loan is to finance a major expenditure. However, it can also be used to cover daily cash flow expenses.

What is a business line of credit?

A business line of credit (LOC) is like a cross between a short-term business loan and a business credit card. When you open a business LOC, the lender approves you for a credit limit on the account. This credit limit represents the maximum amount of money your business can borrow at a given time. 

As your business uses its credit limit, less money is available to borrow in the future. But your business can repay the money it borrows (plus interest) and regain access to the same credit line—as long as the business LOC remains in good standing. 

As you borrow against the available credit limit, you accrue interest charges each month. You’ll only pay interest on the amount of money withdrawn.

A line of credit has the potential to be a great cash flow management tool. A study by Intuit found that 61% of small businesses face cash management challenges.

Smart uses for a line of credit include stocking up on discounted inventory, financing for marketing campaigns, covering temporary payroll needs, and more.

Making the choice: Term loan or line of credit?

To determine which option is better for your business,start by answering the following questions:

• Why does your business need financing? How do you plan on using the capital?
• What type of products or services do you offer (and what is the life of those goods)?
• Is your business able to satisfy stricter lender borrowing requirements (with regard to credit, revenue, and time in business) or do you need a more lenient approval process?
• Are your capital needs long-term or short-term?
• What is your standing as a borrower (i.e. credit score, time in business, revenue, etc.)?

Based on the answers to these questions, you can decide whether a loan or line of credit is more appropriate.

If you have great credit, along with sufficient revenue and time in business and you want to borrow money to expand your business, a business term loan would be a solid choice. However, if you have credit problems, your business is relatively new, or you need repeated access to a cash flow financing solution, a line of credit is likely better for you.

Differences between business lines of credit and term loans

A term loan can be an attractive financing solution due to its competitive interest rates and borrowing terms. That said, lender qualification criteria for a business term loan can be more challenging to satisfy compared to other types of financing for small businesses.

A business line of credit is a flexible funding resource that can be useful for many small businesses. Interest rates may be higher with LOCs compared to some term loans and other business financing options, but lender qualification standards are often more forgiving as a tradeoff.

The key differences generally lie in what costs are included, and how you're required to repay your loans.

Lender requirements

Ideally, in either case, you’ll have a credit score above 700, annual revenue that exceeds $100,000 and have been in business for at least 2 years. Depending on the lender, however, these levels may vary. There are always options.

The recommended minimum requirements for each are generally as follows:

Repayment structure

Term loans offer many benefits to small businesses, including the fact that borrowers can often repay the funds they borrow over a longer period of time. Lenders typically require borrowers to make monthly (sometimes bi-weekly) payments with term loans. Longer repayment structures with less frequent payments can be friendly for investments in business growth that take time to provide returns. 

Lines of credit allow business owners fast access to capital during a time of need. 

As a tradeoff for speedy and flexible financing, business owners must often repay the money they borrow over a shorter period. In addition to expedited repayment terms, the payments themselves may also occur on a more frequent basis. Some lenders may require borrowers to make weekly payments toward the money they borrow from their LOC, though others may offer a less demanding payment structure.

Interest rates and fees

Term loans often feature lower interest rates than other types of business financing, including lines of credit. At the time of writing, you might find interest rates as low as ~6% with a business term loan, depending on your creditworthiness and other factors.

In addition to the interest rate a lender charges on your loan, it’s also important to factor in additional fees that could increase your overall costs. That might include origination fees, application fees, late fees, and prepayment penalties, as well as factoring fees and factor rates.

If you’re comparing term loans from multiple lenders to search for the best deal available, this free business term loan calculator from Lendio can help you crunch the numbers. 

Lines of credit often feature higher interest rates compared to business term loans and other sources of financing. Interest rates commonly range between 8% and 24% on business LOCs.With lines of credit, many lenders also charge annual fees, origination fees, maintenance fees, late fees, and other expenses. So, read the fine print before you sign any financing agreement. You can also use this free line of credit calculator from Lendio to compare the cost of multiple business LOC options. 

When should you apply for a business term loan?

If your business needs financing for any of the following reasons, a term loan is likely the better fit.

• Opening a new location - Expanding to a new business location requires a sizable upfront investment that might take time to produce a profit. A term loan can help you amortize the investment over several years.

• Hiring new employees - A term loan is a great way to handle the upfront costs associated with bringing on new staff and can provide a cash cushion for your business to manage increased payroll expenses.
• Renovations and capital improvements - A term loan can stretch out upfront renovation costs, enabling your business to continue to run without a sizable cash outlay.

When should you apply for a business line of credit?

The following situations are examples of when a business line of credit could be helpful to a business. 

• Cash flow management - Many small businesses struggle to bridge the gap between accounts payable and accounts receivable. With a line of credit, a business can use this resource to pay its vendors and repay the funds it borrowed once its customers pay their invoices.
• Seasonal sales cycles - Businesses that have a busy season could use a line of credit to ensure a cash cushion during slower months.
• Inventory purchases - A business can draw on the line of credit to purchase inventory and pay it down when it sells the inventory at a later date.

The last thing to keep in mind– term loans and business lines of credit are not your only two options. Although these are two of the most popular and useful small business funding resources available, there are other types of small business loans you can consider if you feel like your business needs alternative financial resources.

The information in this blog is for informational purposes. It should not be used as legal, business, tax, or financial advice. The information contained in this page is Lendio’s opinion based on Lendio’s research, methodology, evaluation, and other factors. The information provided is accurate at the time of the initial publishing of the page (December 13, 2022). While Lendio strives to maintain this information to ensure that it is up to date, this information may be different than what you see in other contexts, including when visiting the financial information, a different service provider, or a specific product’s site. All information provided in this page is presented to you without warranty. When evaluating offers, please review the financial institution’s terms and conditions, relevant policies, contractual agreements and other applicable information. Please note that the ranges provided here are not pre-qualified offers and may be greater or less than the ranges provided based on information contained in your business financing application. Lendio may receive compensation from the financial institutions evaluated on this page in the event that you receive business financing through that financial institution.

Business loans are crucial for helping small businesses thrive by providing the necessary capital to cover startup costs, invest in inventory, or upgrade equipment. For many small business owners, these loans are not just a means to an end; they are a lifeline that enables them to seize growth opportunities and navigate the challenges that come their way. Therefore, it is vital to understand the current lending landscape that small businesses are facing.

Key stats.

• 68% of small business owners say access to financing is the most important factor in the growth of their businesses.
• 67% of small business owners have no preference about which type of lender they get a loan from.
• 85% of small business owners said that speed to loan approval is important when selecting a lender. 
• 77% of small business owners surveyed stated that they prefer to apply for a loan online or via a mobile app.
• 50% of small businesses say they don't know if the bank they use for checking has the right loan options for them. 
• Only 24% of small business owners apply through the bank they already work with.
• The average small business loan is $38,000.
• 59% of SBA loans are approved.

High-level overview.

Lendio recently surveyed 1000+ small business owners to better understand how financing affects the success of their business, their experience in today's lending environment, and how they view the future of small business lending. Of those small business owners, 68% said that access to financing is the most important factor in the growth of their businesses. Additionally, 46% of those 1000+ small business owners said they would see anywhere from 30-100% revenue growth if they had access to financing their business needs.

Lendio found that 78% of the small businesses it interviewed have a positive outlook on their ability to access capital in the next year. Perceptions vary based on how well-qualified the small business is for a loan. Only 12% of the most qualified borrowers stated that the majority of small businesses don't have access to the capital they need while 21% of the least qualified borrowers said the same.

Lendio found that while small business owners generally have a positive outlook on their ability to access capital, they have a fairly neutral perception of the loan application process. When asked which type of lender they'd prefer 67% of small business owners said they have no preference.

The takeaway:

85%

of small business owners say speed to loan approval is important when selecting a lender.

While larger enterprises are willing to experience lengthy loan approval and funding processes, small business owners behave more like consumers--they prefer a quick and easy loan process. 

• 85% of small business owners said that speed to loan approval is important when selecting a lender. 
• 77% of small business owners surveyed stated that they prefer to apply for a loan online or via a mobile app.

Lendio also found a general lack of awareness of the small business loan process. 

• 50% of small businesses say they don't know if the bank they use for checking has the right loan options for them. 
• Only 24% of small business owners apply through the bank they already work with. 
• Lendio found that 22% of small business owners either don’t know or don’t have a preference for their preferred type of business financing.

These findings point toward a need for more education about the lending landscape for small business owners.

Average business loan amount.

Understanding the average loan amounts small businesses receive is critical for entrepreneurs seeking to plan their financial strategies effectively. Businesses should be aware of not only the amounts they might qualify for but also how these figures align with their growth aspirations and operational needs. 

• The average amount a small business receives through Lendio’s marketplace is $38,000. 
• The average SBA loan amount in 2023 was $479,685.
• On average, small businesses are offered 50% of the loan amount they initially asked for.

SBA loan approval rates.

The Small Business Administration (SBA) plays a vital role in supporting small businesses by providing access to loans with favorable terms. In 2023, approximately 59% of SBA loans were approved (34% received full approval, 25% received partial approval), indicating that over half of small business owners successfully navigate the application process. This is particularly encouraging for entrepreneurs who might face challenges securing traditional financing, as SBA loans often come with lower interest rates and longer repayment terms.

Reasons for a business loan.

Lendio found that the majority of small businesses pursue loans for a variety of essential reasons, primarily to secure working capital (33%) to support daily operations and manage cash flow. Additionally, small businesses often seek financing for crucial investments like equipment purchases (19%), expansion efforts (15%), starting a business (14%), payroll (6%), real estate (4%), or for other purposes (9%). Each of these reasons highlights the integral role that loans play in facilitating growth and sustainability in the competitive business landscape.

Gender insights

Men and women generally had similar responses to Lendio's survey questions, but a few differences stood out.

Only 46% of women are positive or very positive that they can access the capital they need compared to 55.8% of men who said the same. 13% of women also rated their ability to access the capital they need as "very poor" compared to 9% of men.

Another key insight points to a need for education surrounding the business lending landscape, especially for women. 53.3% of women and 41.7% of men are unsure of their primary bank's loan options. More women business owners stated that they would like education on the business loan application process across the board except interest rates (this was equal). This includes lender types, loan agreements, and loan types.

Women-owned businesses received just 32.6% of approvals and 28.4% of the dollars offered in SBA 7(a) and 504 loans in the 2024 fiscal year. Across the lending landscape as a whole, women are less likely to receive the full amount of funds requested. In 2023, 45% of women-owned businesses were approved for the full amount of capital requested vs. 55% of men-owned businesses.

Additionally, 25% of women are denied a business loan compared to 19% of men.

Minority insights

When it comes to accessing business loans and receiving funding, entrepreneurs of color can face significant challenges.

• 84% of businesses started by a person of color relied on personal savings or funding from friends or family to fund their businesses. 
• 28% of employer businesses started by a person of color have obtained a business loan compared to 48% of white-owned business startups.
• Nearly half of black business owners who apply for a loan are denied.

Conclusion

Understanding the lending landscape for small businesses is crucial for their growth and success. The statistics presented highlight the significant role that access to financing plays in empowering entrepreneurs across the United States. While optimism prevails among small business owners regarding their ability to secure capital, challenges persist, particularly for women, minority, and veteran entrepreneurs.

As a record number of businesses opened last year, Lendio reveals the top states to start a small business. 

2023 was a record-breaking year for small businesses as a record-breaking 5.5 million new business applications were filed in 2023, according to the Small Business Administration.

The 2020s have been one of the most challenging historical decades for small business owners. The economic impact of the global pandemic continues to ripple through the American and global economies. Inflation, high interest rates, and the unprecedented migration of educated workers to new locations have been just a few of the challenges that small businesses face. Amid such paradigm shifts in how—and where—Americans work and live, Lendio commissioned this study to see the state of the small business landscape across the country.

Key Findings

We explored trends in ten metrics that are critical to the success of small business owners in 2024’s rapidly changing and uncertain landscape. These metrics included small business lending, cost of living, real estate data, educated worker migration, corporate tax rates, state-level incentives for business owners, and more. Our key findings include:

• Top states – Florida, Texas, and North Carolina rank top in our list due to lower taxes, an influx of movers to these states, sufficient business funding, and higher amounts of personal consumption expenditures.
• Bottom states – Hawaii, New Hampshire, and Nebraska are the bottom three states, due to low business funding and venture capital availability, limited local incentive programs, high tax rates, and high cost of living.  
• Ranking shifts – While the states that made the top 10 stayed the same from Lendio’s 2023 analysis, there were some shifts in the line-up including Florida edging out Texas for the top spot.
• Ranking factors – The states that rank highest are those that experienced large influxes of migration, with reasonable costs of living. The availability of business funding, venture capital, and local incentive programs were also important factors that impacted the rankings. 

Top 10 best states to start a small business.

10. Oklahoma (Previously 7)

This state boasts some of the most favorable local incentives in the country for business owners, with 84 inventive programs in total. Housing prices and cost of living are lower, compared to other states. Combined with a low, 4% corporate income tax rate, this creates an environment many entrepreneurs will find attractive. On the flip side, businesses in Oklahoma have lower-than-average access to capital and have seen a decline in educated workers moving to that state.

9. Utah (Previously 10)

Businesses in the state of Utah have exceptional access to capital. Utah is approved for the highest number of SBA loans per 100,000 population in the U.S. It also had $10,000 in VC funding per $1 million GDP, ranking No.10 in the U.S. in 2023. The state also has a lower corporate tax rate of 5% and offers 34 tax incentives to small businesses. The reason Utah did not rank higher on our list is that it has become an increasingly popular destination, and as a result, housing costs have increased significantly.

8. Massachusetts (Previously 4)

It’s no wonder tech-savvy Massachusetts gets the most amount of venture capital disbursed per $1 million of GDP, ranking No. 1 in the U.S. The state offers 73 different incentives for business owners. Massachusetts businesses also have one of the highest five-year survival rates of 57%. On the flip side, it has one of the highest median housing values in the U.S., and it is seeing more people leaving (57,000)—rather than moving to—the Bay State.

7. Georgia (Previously 9)

Georgia is also a great place for businesses, as it is within the top states with the most small business loans approved—over 30 small business loans per 100,000 residents through Lendio’s marketplace. Georgia has seen an influx of 81,406 people move in, making it the sixth-best state in this crucial category. Although the housing prices remain reasonable, Georgia has the second-highest growth in cost of living. 

6. Ohio (Previously 3)

Ohio has no corporate income tax rate. Even with the state’s gross receipt tax rate, which is not strictly comparable to the corporate income tax rate, it’s still considered a low-tax state. Ohio is also among the top states that have small business loans approved per 100k residents. With very low housing costs and good local incentive programs for businesses, Ohio is a good place for small businesses to settle. 

5. South Carolina (Previously 8)

Half of all startups in the Palmetto State have survived at least five years, and the state government offers 77 different incentives for small business owners—only three states offer more incentives than South Carolina. The state has a low 5% corporate income tax rate. In addition, housing prices and cost of living are among the lowest of all states, and 84,030 people moved in in 2022, making it the 4th-hottest place to relocate. 

4. Colorado (Previously 6)

If you are in Colorado, you may have a good chance to land a small business loan. Colorado ranks No. 7 in the U.S. for issuance of small business loans, with 27 small business loans per 100,000 residents. It also has the 7th highest amount of venture capital per $1 million GDP. With 55,768 educated workers moving here and a 4% corporate income tax rate, business owners can find a good place to start a small business. 

3. North Carolina (Previously 5)

North Carolina has been a hot place for in-migration, with 99,796 people relocating there in 2022 (the 3rd highest in the U.S.). Businesses here have an above-average, five-year survival rate. The state also has a low corporate tax rate of 2.5% and above-average access to business loans. With low housing costs, business owners find it an attractive location to start and run a small business. 

2. Texas (Previously 1)

Texas ranks as the second-best state for small businesses. While Texans receive a lower amount of SBA loan approvals/100K residents than other states, they were the 7th highest state for loans offered through Lendio’s marketplace. Of all businesses started in 2017 in the state, more than half survived five years of operations, outlasting those in many other states. According to Census Bureau data, over 400,000 people with at least some college education moved into Texas in 2022, making it a prime location for educated entrepreneurs to spread their wings. Beyond just workers, Texas has become one of the most popular places for Americans to relocate—thanks, in part, to its lack of a state income tax.

1. Florida (Previously 2)

Florida is the best state to start a business due to a low corporate tax rate (5.5%) and the mass migration of consumers and companies to the state. The Sunshine State sees more than half of its startup businesses survive for at least five years. It’s also a top recipient of SBA loan dollars (12th compared to other states) and ranked 2nd for the number of loan offers facilitated through Lendio’s marketplace.

Final Thoughts

The state where your business operates has a direct impact on your ability to effectively run your company. As an entrepreneur, you get to decide which of these factors matters most to you. 

Florida consistently performed in the top tier for business owners, earning it a No. 1 spot for its top small business loan dollars, mass migrations of educated workers and consumers, and reasonable tax rates. Meanwhile, Nebraska, New Hampshire, and Hawaii ranked last, in part because of their high costs of living and housing, fewer incentive programs for businesses, and fewer workers with bachelor’s degrees than many other states.

Wherever you work, each state presents opportunities and challenges. Navigate those factors successfully and you can run a competitive, impactful business. Do the right research. Decide which criteria matter most. Make sure you’ve got the capital to build your dreams. Then take on calculated risk to start something great with products and services that benefit all of us.

Methodology

We used publicly available data from a variety of federal government and nonprofit sources to identify the best and worst states for small businesses in 2024. We used a Z-score distribution to scale each metric relative to the mean across all 50 states. Outliers were reduced to a score of 2 or -2. Overall, we examined ten factors including: 

Sources:

• Venture capital disbursed per $1 million of GDP, 2022 (National Science Foundation). 
• Five-year startup survival rate from 2018-2023 (Bureau of Labor Statistics)
• Small business loans, 2023 (7a and 504 loans). (Small Business Administration)
• Small business financing offers through Lendio’s marketplace Q3 2023-Q2 2024. 
• Small business incentives, 2023 (Council for Community and Economic Research)
• Corporate income tax rates calculated as an average across tiers, 2024 (Tax Foundation)
• Educated Worker Mobility, 2022 (Census Bureau)
• Hottest relocation markets, 2022 (Census Bureau via National Association of Realtors)
• Personal consumption expenditures, 2021-2022 (Bureau of Economic Analysis)
• Median housing value of owner-occupied housing units, 2022 (Census Bureau) 

Note: In addition to regular income taxes, many states impose other taxes on corporations, such as gross receipts taxes and franchise taxes. Some states also impose an alternative minimum tax and special rates on financial institutions. Nevada, Ohio, Texas, and Washington do not have a corporate income tax but do have a gross receipts tax with rates not strictly comparable to corporate income tax rates. 

Okay, so you have bad credit or little credit history and you’re trying to open a business credit card account for your small business… Plenty of successful business owners have launched their companies with bad credit. 

Here, we take a look at the best business credit cards for bad credit—factoring in terms, rewards, fees, and availability.

What is a “bad” credit score?

Generally, a FICO score of 670 or above is considered good (or very good, or exceptional, as you get higher). Anything below 670 is generally considered fair or poor. Fair or average credit is typically in the range of 580-669. Anything under 580 is looked at as poor or bad credit.

These are the barometers we’ll use when looking at our list of options below.

What to look for in a business credit card?

Let’s be honest… With bad credit, your rewards and perks likely aren’t going to be great. But that’s okay—it’s all a natural part of building, or rebuilding, your credit.

There are a few key factors to consider when comparing small business credit cards:

• A low annual fee: Look for cards that offer no annual fees or low fees covered by other perks. This bonus can save you a lot of money over time.  
• 0% APR introductory period: This period will prevent you from accruing interest and is a valuable tool if you want to consolidate and eliminate your debt over the course of a year. 
• Specific perks: Decide whether you want cash back, points, or rewards for travel, marketing, or other expenses. 
• Employee access: How can your employees use the card? Will your card provider issue multiple cards for your business?  
• Beneficial reporting: Some credit providers report payments to both commercial and personal credit bureaus. Determine which option is best for building your credit. 
• Consumer protections: Certain consumer protection laws don’t apply to small business credit cards. Consider looking for a card that offers the security you need.

The 5 best business credit cards for bad credit

While shopping for the best business credit card, you’ll find dozens of viable options. However, you need to know what you value and what actually constitutes a good deal. Consider a few of our frequently recommended cards and the bonuses they offer.

Best for poor or bad credit

1. Bank of America: Business Advantage Unlimited Cash Rewards Secured Business Credit Card

Bank of America’s Business Advantage Secured Business Card is made for those looking to establish and build credit.

It’s biggest perk? You gain 1.5% cash back on every purchase, with no annual cap.

Card details:

• $1,000 minimum security deposit
• No annual fee
• 28.49% variable APR
• No introductory APR
• 4% balance transfer fee

See the full breakdown of Bank of America’s Secured Business Credit Card.

2. First National Bank of Omaha: Business Edition® Secured Mastercard® Credit Card

FNBO’s secured business credit card allows you to request any credit limit from $2,000 to $10,000, so long as you provide a deposit of the same amount.

Account details:

• Required security deposit matching credit limit amount
• 25.99% variable APR
• $39 annual fee

See the full breakdown of FNBO’s secured Mastercard.

Best for fair credit

3. Capital One: Spark 1% Classic Credit Card

The lowest threshold of Capital One’s Spark credit card series, the Spark 1% Classic card is another good option for small businesses looking to establish and build credit, and earn cash rewards in the meantime.

For a card like this, you’ll likely need a credit score above 600.

Account details:

• 1% unlimited cash back on all purchases
• 5% cash back on hotels and rental cars booked using Capital One Travel
• 29.99% variable APR
• No annual fee

See the full breakdown of the Capital One Spark 1% Classic credit card.

Best for startups and new small businesses

4. Brex

Brex provides credit cards for startups and growing businesses of varying sizes, and of varying credit scores.

Brex credit cards do not require a personal guarantee to open an account—which companies often do, especially when you have poor or fair credit.

The biggest drawback? In general, Brex requires you to maintain a $25,000 cash balance minimum in order to keep your credit limit active.

Account details:

• 18.49%-26.49% variable APR
• Up to 7x points per dollar on select purchases (1x-7x depending on category)
• No annual fee

See the full breakdown of Brex credit cards.

5. Ramp 

Ramp is similar to Brex in that it serves startups and growing small businesses. It also serves companies with bad credit or no credit.

What makes Ramp unique is that they use your cash on-hand and business revenue as determinants for qualification. There’s no credit score requirements or credit checks.

Ramp is not your traditional credit card—it’s a charge card. While there’s no interest, you are required to pay your monthly balance in full, every month.

Account Details:

• No annual fee
• No late fees
• 1%-5% cashback on select purchases
• Requires $50,000 cash balance to qualify

Is a business credit card worth it?

In many ways, a business credit card operates like a personal credit card. 

So then, you might read this and think, “if I have bad credit or no credit history… should I build (or rebuild) my credit with a personal account first and open a business account later, or just open a business account?

In most cases, you’ll still benefit from opening a business credit card, even when you have bad credit. Many of the benefits remain the same, regardless of what your credit score is.

Benefits of business credit cards

There are several benefits of opening a business credit card, including:

1. It is easier to qualify for a business credit card.

Credit cards are typically easier to secure than loan funding. While lending marketplaces like Lendio can help you find a small business loan than meets your needs, some lenders are warier of people with bad credit. With a small business credit card, you can get approved faster, though your spending limit might be lower or your interest rate higher. These caveats help the credit provider mitigate the risk of offering credit to someone with a lower credit score. 

2. Business cards typically have higher limits.

If you are worried about a low spending limit with your business card, evaluate your company profits and assets before applying for a card. Many business credit cards have higher spending limits than personal cards because they are based on a company’s assets and revenue. This spending flexibility makes it more useful to business owners, especially those who need to pay vendors or make large purchases. 

3. Business credit cards help you build up credit.

Having a credit card is an important tool for building up bad credit. Within 30 days, you have an opportunity to show credit providers that you can repay your debts. By continuously paying your debts over time, you can heal your credit and start to qualify for more favorable card terms and business loans in the future. 

4. These cards have valuable rewards and incentives.

Like personal credit cards, business cards offer incentives to get people to sign up. You might be able to find a card that offers cash back on your purchases to help you save (and to make paying off your balance easier) or a card that helps you build travel rewards for when you attend client meetings in a different state. These earned rewards are unique to credit cards and don’t come with other loan types.

5. Bookkeeping is easier around tax time.

Tax season is typically incredibly frustrating for small business owners. You need to sort through hundreds of expenses, invoices, and charges for the deductions you deserve. A business credit card can simplify this process. If you centralize your spending in one place—your business credit card—then you can quickly organize all your expenses and streamline your tax filing.

It can feel overwhelming to try and open a new credit card when you have bad credit. But the good thing to know is, there are always options for building and rebuilding your credit.