Study: Small Business Owners Top Consumers in Credit Management

Sep 16, 2016

Experian finds small business owners keep up with higher debt payments better than consumers and men make up a majority of the small business owners studied.

Owners of small businesses manage their credit and debt payments better than consumers, despite having higher balances, according to the Face of Small Business study from Experian released Sept. 15.

The study includes attributes on credit management and demographics of small business owners based on a data analysis from a random sample of 2.5 million small businesses and one million consumers, according to a news release from Experian.  

“Findings show that small-business owners outpace consumers when it comes to credit management,” according to the news release. “For example, the average personal credit score for a small-business owner is 721—48 points higher than the average consumer score of 673.”

Owners of small businesses also have more available credit. Their average credit limit is $56,100, compared to $26,900 for consumers, according to Experian.

“Debt load, however, also is higher for small-business owners, with the average total balance of all trades at $195,000 versus $96,000 for consumers. From a payment perspective, small-business owners have a higher monthly obligation as well, with an average payment of $2,032 compared with $954 for consumers.”

Experian also reports that just 5.9 percent of small-business owners have one or more revolving bank cards that are 90 or more days “beyond terms” in the past two years compared to 7 percent of consumers.

Small business owners are also more likely to own a home and have higher earnings than the average consumer, according to the news release. Small business owners’ average income is $91,600 compared to $70,400 for consumers. Sixty-two percent of small business owners own a home, over 47 percent of consumers.

The Face of Small Business study also includes demographics, which ACA International recently researched for small businesses in the credit and collection industry.

Many companies in the credit and collection industry are small businesses, shown in ACA International’s white paper, “Small Businesses in the Collection Industry: An Overview of Organization Size and Employment,” by Director of Research Josh Adams, Ph.D.

Forty-eight percent of ACA member organizations (1,164 companies) have fewer than nine employees, according to the white paper. Additionally, 86 percent of members (2,080 companies) have 49 or fewer employees and 93 percent of members (2,257 companies) have 99 or fewer employees.

Experian finds that 65.6 percent of small business owners are male and 31.2 percent are female.

In the credit and collection industry, according to ACA’s research, women make up a majority of the total workforce.

“According to prior research on the demographics of the collection industry, ACA found that although women compose roughly 47 percent of the overall workforce in the U.S., the collection industry is overwhelmingly female, with women making up 70 percent of the total debt collection workforce.”

Statistics on education in the Experian study show 68.6 percent of small business owners have attended at least some college.

In the credit and collection industry, “the largest proportion of individuals employed in the collection industry, particularly women, has either some college or an associate degree or a high school diploma or equivalent. This is reflective of the broader population, where 58.9 percent of the population aged 25 or older has ’some college or more,’” according to Adams’s research. Seventy-two percent of men and 63 percent of women in the collection industry have some college or more.

Experian will present details from the Face of Small Business Study during a webinar on Sept. 27.

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