The Use of Credit Card Debt by New Firms : Sixth in a Series of Reports Using Data from the Kauffman Firm Survey

This report uses data from the Kauffman Firm Survey (KFS) to study the credit card debt characteristics of new firms. It specifically investigates whether revolving credit card debt reduces a firm's probability of survival. More than half of all new firms rely on debt financing when starting operations. A vast majority of these businesses rely on credit card debt to fill any equity gap. This debt financing strategy can be very expensive. While credit card debt provides needed short-term funding, reliance on this type of financing may lead many businesses into a long-term liquidity drain that affects their financial stability - and thus survival