Businesses struggling to secure commercial loans are turning to credit cards, a source has claimed.

Many early-stage start-ups are relying on credit card finance, reports Business Week.

Statistics released by the National Small Business Association states 44 per cent of companies use credit cards, 28 per cent more than in 1993, while in the same time period the number of businesses using bank loans fell by 17 per cent to 28 per cent, the publication claims.

The magazine also states the companies behind the cards are responsible for "courting small business owners", with six billion offers sent out each year to persuade firms to use their products.

Many businesses take-on credit card debt after being refused a bank loan, with some companies making a success of the route.

Chris Mauzy took out two American Express cards to finance his business and now says he is "glad the bank turned him down", as he has avoided large interest payments, the source notes.

Recent reports by Bloomberg stated US consumer credit card debt is nearing $1 trillion (£535 billion).

RELATED ARTICLES:

• Xmas parties recommended
• FPB: New rates law would damage SMEs
• Rate cut welcomed
• Lending to small firms 'not as risky as claimed'
• Queen's Speech 'offers no help for firms'