An overview of the Financial Services for Small Businesses in the U.S., 3rd Edition report. Having lagged the post-recession recovery curve of larger companies, small businesses continue to build momentum—and financial institutions large and small are broadening their arsenal of products and services accordingly. Packaged Facts estimates the value of purchases made with small business credit cards alone at $505 billion, and we expect 11.5% growth in 2015. So far, small business loans have not caught up, leaving ample room for innovation. But it’s also about finding the right bank: our analysis reveals significant differences in large banks’ ratios of small business and microloans to loans outstanding. And it’s also about understanding small business participants—owners, managers, the self-employed—whose banking, securities, and business credit card usage we trend to lend insight into their bankability.

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Financial Services for Small Businesses
in the U.S., 3rd Edition

2. Financial Services for Small Businesses in the
U.S., 3rd Edition
Financial Services for Small Businesses in the U.S., 3rd Edition has been prepared by Packaged
Facts. We serve consumer product and service companies and allied businesses in the United
States and internationally with a complete line of research publications.
Packaged Facts market intelligence reports are designed to aid the executive decision-maker by
providing essential data and concise analysis with a focus on marketplace trends, consumer
insights, and emerging opportunities.
Publication Date: February 2015
Price: $4,500
Report Length: 163 Pages
All rights reserved. No part of this report may be reproduced without permission of the publisher.
Copyright © 2015 Packaged Facts

3. REPORT ABSTRACT
Having lagged the post-recession recovery curve of larger companies, small businesses continue to build
momentum—and financial institutions large and small are broadening their arsenal of products and services
accordingly. Packaged Facts estimates the value of purchases made with small business credit cards alone at
$505 billion, and we expect 11.5% growth in 2015. So far, small business loans have not caught up, leaving
ample room for innovation. But it’s also about finding the right bank: our analysis reveals significant
differences in large banks’ ratios of small business and microloans to loans outstanding. And it’s also about
understanding small business participants—owners, managers, the self-employed—whose banking, securities,
and business credit card usage we trend to lend insight into their bankability.
Financial Services for Small Businesses in the U.S., 3rd Edition assists in understanding these and other trends
shaping the market for small business financial services. The report does the following:
• Assesses the small business financial services strategies of American Express, Bank of America, Capital
One, Citibank, JPMorgan Chase, MasterCard, U.S. Bank, Visa and Wells Fargo, with an emphasis on their
respective small business card and small business lending programs and related initiatives. Analysis includes
small business credit card purchase value estimates; and, for Visa and MasterCard, debit card purchase value
estimates.
• Assesses the small business financial services market, by identifying and trending small business participants
(owners, self-employed, etc.); employment and firm size; business challenges; and use of credit (trade credit,
loans, and credit cards).
• Trends small business owner, small business management & self-employed worker demographics, with a focus
on household income, securities and residential ownership trends
• Trends small business owner banking relationships and products used by institution, as well as investment
trends and banking and credit card products used, through 2014.

4. REPORT ABSTRACT
• Identifies the degree small business stakeholders are involved in purchasing decisions & the purchase decision
process.
• Provides small business expenditure market sizing estimates and a detailed market size and forecast for small
business credit/charge and debit cards by card network.
• Trends consumer and business credit card usage and behavior through 2014 among 1) all adults employed
by small businesses, 2) small business owners and managers, and 3) self-employed individuals working for
small businesses. Metrics include card usage and active usage, and we emphasize demographic analysis of
respondent HH income, company size and securities owned.
• Analyzes the small business cards programs of the top 100 U.S. financial institutions by assets.
• Assesses the degree personal cardholders use business cards and vice versa, with an estimate for amount of
personal card spend done on business cards.
• Trends and ranks major banks by total amount of small business loans and microloans and share of total loans
outstanding (including nonfarm non-residential loans and commercial and industrial loans) through 2014.
• Trends and ranks the top SBA lenders by total loan volume and by share of total loans outstanding through
2014.
• Trends small business loan demand and credit standards; and financing and funding choices through 2014.

5. • More small firms rely on credit cards (36%) than any other source of financing, followed by earnings of the
business (35%). The share of small business citing credit cards is up from 31% two years earlier.
• The success that small business credit cards have enjoyed so far is tied largely to convenience and lending
power: Credit cards can serve as a convenient alternative to paying expenses by cash or check if a business
pays balances on time and in full each month. They can also be a substitute for traditional forms of credit when
balances are carrier month to month.
• Among major banks, Bank of America attracts the highest proportion of small business owner/managers and
ties with Wells Fargo as the bank of choice among the self-employed.
• Increasingly, as card issuers wrap additional features into the mix, small business cards can be used as
cash management and expensing tools, fraud prevention and tracking tools, and even employee expense
management tools. All the while, major industry players are adapting sophisticated corporate and commercial
products and tailoring them to small business cardholders.
• For the average cardholder, nothing may tilt the lever toward increased usage more than a rich set of rewards,
and issuers ranging from American Express, Capital One, U.S. Bank and JPMorgan Chase are feeding that
itch by ratcheting up earnings rates and tailoring rewards to spend categories important to small businesses
• We expect U.S. small business card purchase value to grow noticeably in 2015 and 2016, buoyed by industry
innovation, macroeconomic trends favoring small business expansion, employment increases, and continued
migration from cash and check to card-based transactions.
• Small business use of mobile devices—in particular “smart” devices—opens up a world of opportunity, much
like it has done in the consumer marketplace. As mobile technology and payments continue to converge, more
and more small businesses will look to their smartphones to make payments and meet their financial services
needs.
SAMPLE INSIGHTS & HIGHLIGHTS

6. SAMPLE INSIGHTS & HIGHLIGHTS
• The percentage of female small business participants is substantial: As of 2014, they comprised 36% of small
business owner/managers and 44% of small business self-employed. With this in mind, banks such as Wells
Fargo, which has pledged 30% of its small business loans to female-run businesses, may want to adjust their
ratios accordingly.
• Small business owner/managers are much more likely than average to have higher incomes, positioning
themselves as mass affluent/affluent customer acquisition targets.
• Despite increasing competition, American Express has a card portfolio that remains the envy of the industry,
skewed to higher FICO, higher spending, and more affluent cardholders that provide a more risk-averse return
on investment.
Seeking financing related to small business size:
• While 22% of firms overall reported applying for credit in the first half of 2014, there was considerably weaker
demand among firms with less than $1 million in annual revenues than those with larger revenues.
• Only 18% of microbusinesses (those under $250,000 in revenue) applied for credit. By contrast, over 30% of
small ($250,000-$1 million) and mid-sized firms ($1-$10 million) and 58 percent of commercial firms (greater
than $10 million) sought credit. (See figure on following page.)

7. SAMPLE INSIGHTS & HIGHLIGHTS
Percent of Small Businesses Applying for Financing, by Small Business Revenue Size, 2014
Note: data for survey respondents who applied for financing during the first half of 2014.
Source: Packaged Facts, compiled from data included in the 2014 Joint Small Business Credit Survey Report,
Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia, released January 2015.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Did not apply Applied
All
77%
22%
80%
18%
Micro
< $250k
32%
67%
Small
$250k-$1M
31%
69%
Mid-size
$1M-10M
42%
58%
Commercial
> 10M

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