Texas Border Business
By Mike Flood Senior Vice President, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce
Small businesses comprise 99% of the businesses in the U.S., employ 46% of Americans, and represent 44% of America’s GDP. Small businesses are the backbone of the American economy, and according to the Federal Reserve’s Small Business Credit Survey, credit cards are the main financial tool used to navigate the day-to-day challenges of running a business.
Whether covering unexpected expenses, bridging slow periods or purchasing seasonal inventory, credit cards provide fast, flexible working capital—often at moments when traditional financing options fall short.
But some lawmakers are considering imposing a 10% limitation on the interest (i.e., rate cap) that any small business or individual with a credit card would pay on outstanding debt. This policy position sounds good at first, but in fact will negatively impact small businesses across the country.
The irony is the proposed “solution” to cap pricey credit card interest rates would actually make affordable and convenient credit disappear entirely for the 99 percent of businesses that need it most: small businesses.
A Critical Financial Tool
Data from recent small business surveys reflects just how vital credit card access is.
According to the 2025 Report on Employer Firms from the most recent Fed Small Business Credit Survey, 56% of applicants sought financing for operating costs, and 51% cited uneven cash flow as a major challenge. The 2025 Report on Nonemployer Firms found that early-stage businesses often turn to credit cards as their primary financing source.
The Q1 2023 MetLife and U.S. Chamber Small Business Index similarly reported that credit cards—alongside local banks and credit unions—remain among the top financing tools for small businesses. In that quarter, 49% of owners said their access to capital was good, down from 54% in Q2 2022 and 67% in Q2 2017. Reliance on personal savings hit 69%, reaching 74% among women‑owned firms and the smallest employers.
The common thread in these numbers is clear: small businesses need flexible, reliable capital. And for many, credit cards fill that gap.
Here are a few stories that illustrate how credit cards help entrepreneurs keep their businesses running:
| • “Being able to buy inventory [with my credit card] upfront and pay it off as revenue came in kept my doors open during uncertain months.” – Texas Restaurant Owner, U.S. Hispanic Small Business Council |
| • “When supply costs jumped, my credit card gave me flexibility to restock without cutting hours and wages.” – A California retailer |
| • “Sandra Diaz told us that securing a business credit card was a crucial step in her business’ creation as she felt it offered her additional financial stability and resources for business expansion. For Diaz, she believed that this strategic decision opened new avenues for growth and personal fulfillment.” – Sandra Lucia Diaz, Lucia Diaz, LLC, Columbia, Maryland |
| • “Being able to have money on hand from his customers accepting cards instead of waiting for a check to clear or potentially bounce, Dave Loparco has more security and peace of mind. Having just one payments terminal was impactful to him and allowed him the flexibility he needed to grow his business.” – Dave Loparco, LaterDayzCustomz, Council Bluffs, Iowa |
Why It Matters
Credit cards empower small businesses to leverage opportunities, weather challenges, and grow. From buying inventory to covering payroll during lean weeks, credit cards provide the financial flexibility entrepreneurs depend on every day.
Capping credit card interest rates at 10% will make it harder and more expensive for them to borrow. If lenders can’t charge interest above the cap, they may add extra fees, reduce or eliminate benefits, lower the credit limit or pull the credit altogether. The same will happen to over 80% of consumers, thus lowering the ability to purchase goods – thereby exacerbating the issue.
Businesses will still have a need for credit, but will have to turn to installment loans, buy-now-pay-later programs, club cards, and other more costly, less flexible and less transparent financing methods. These higher costs and less transparent credit will burden small businesses and decrease consumer spending at businesses across the country. In the long run, this could limit growth and make it more difficult for small businesses to manage everyday cash-flow needs.
Why We Know the Outcome
Until the late 1970’s, many state usury laws capped interest rates at 10%. Only those with the highest credit qualified for credit cards. The substantial majority of low- and moderate-income (LMI) households and small businesses were excluded entirely or relied upon on riskier—and higher-priced–alternatives such as trade credit, layaway, and payday lending. When caps lifted and banks could price risk into the interest rates, credit cards became widely available and financing more affordable.
As policymakers consider changes to credit card regulations, it is critical to understand how these essential tools support the small businesses that drive our economy.
Information source: US Chamber of Commerce
