Small Businesses Bear the Brunt of Inflation, Relying on Credit Cards to Stay Afloat

Small businesses across the United States are increasingly turning to credit cards to cover rising costs, as inflation continues to put a strain on their operations. Some business owners, like Seattle coffee shop owner Maher Youssef, are blaming the Biden administration for the increase in expenses and are calling for more support from the government.

Small businesses, the backbone of the American economy, are facing unprecedented challenges as inflation surges to historic highs. Faced with rising costs and dwindling profits, many small business owners are resorting to credit cards to keep their businesses afloat. According to a recent report by Bank of America, small business credit card balances have increased by 18% since 2019, a troubling trend that highlights the financial stress facing these vital enterprises.

Maher Youssef, owner of Pluto Organic Cafe in Seattle, has firsthand experience with the impact of inflation on his business. He has been forced to rely on credit cards to pay for expenses, as his revenue has not kept pace with rising costs. Youssef believes the Biden administration is not doing enough to help small businesses in this challenging economic climate.

"I think Biden should focus on that. If he can't do it, he should resign," Youssef told Fox News.

Youssef's call for more government support is echoed by many small business owners who are struggling to make ends meet. The Bank of America report found that 28% of small businesses have raised prices to offset inflationary pressures, while 25% cite inflation as their top concern. However, many businesses, like Youssef's coffee shop, are hesitant to raise prices too much for fear of alienating customers.

"We're a small business, a small corporation, a small cafe. I can't raise the prices. I can't put the coffee for, like, you know, a couple bucks more. The maximum we can raise the price is — what — 50 cents, a dollar? Because if you put the prices crazy, people are not going to buy from you," Youssef explained.

Despite rising prices, consumer spending has remained strong, but small businesses are not reaping the benefits. Many are being forced to cut back on staff, reduce operating hours, or even close their doors altogether. The National Federation of Independent Business (NFIB) recently reported that small business optimism has hit its lowest level since 2012, a sobering indicator of the economic challenges facing these businesses.

President Biden has acknowledged the impact of inflation on small businesses, but has blamed corporate greed for the price increases. In a recent speech, Biden defended his administration's efforts to bring prices down but accused large businesses of "ripping people off."

"But for all we've done to bring prices down, there are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation," Biden said.

Biden's focus on corporate greed has drawn criticism from some small business owners, who argue that the government is not doing enough to address the underlying causes of inflation, such as supply chain disruptions and labor shortages. They contend that more needs to be done to support small businesses and help them weather this economic storm.

As inflation continues to erode small business profits, the reliance on credit cards to stay afloat poses a long-term risk to the financial health of these businesses. High credit card debt can lead to increased interest payments and reduced profits, further exacerbating the financial strain on small businesses.

The Biden administration has taken some steps to assist small businesses, such as providing loans and grants through the Paycheck Protection Program (PPP). However, many small business owners argue that these measures have been inadequate and are calling for more comprehensive support from the government.

As the economic challenges facing small businesses continue to mount, it remains to be seen whether the Biden administration will take more aggressive action to assist these struggling enterprises. The fate of many small businesses and the vitality of the American economy depend on it.