Sticking it on Plastic: Credit Card Finance and Small and Medium Sized Enterprises in the UK

This paper investigates the role of credit card financing in UK small and medium sized enterprises (SMEs) and how this varies by location and business orientation. Using a large scale dataset of UK SMEs, the results of a regression based analysis suggest that firms located in peripheral geographic areas have greater usage of credit cards relative to counterparts located in ‘core’ locations. Innovative, growth, and export-oriented SMEs are also more inclined to use credit card financing. Moreover, SMEs that use credit cards as a form of improvised financial ‘bootstrapping’ are more likely to seek additional funding sources in the future.