While small businesses may have a tough time getting a SBA-backed loan, the Federal Reserve is reporting that small businesses are not having problems getting credit cards.
The report shows:
About 75 percent of applicants in 2009 were approved for small business credit cards, according to the report . Even among businesses considered high-risk, 72 percent were approved for a credit card.
In general, credit card loan terms are worse than regular loan terms. The average interest rate on a business credit card in 2009 was about 12 percent and cash advance interest rates 20 percent or more, says the report.
Credit card issuers can also change the terms of the loan or revoke credit card lines altogether. Business credit cards are not subject to the consumer protection afforded by the credit card reform bill passed last year.
While over 80 percent of small businesses use credit cards, only 12 percent borrow (carry over a balance from month to month) on credit cards.
If small business owners worry about borrowing on credit cards, they won’t invest in long-term businesses planning or growth, says CNN.com . And that means they won’t invest in hiring, the linchpin in reviving the economy.
#####
Source: http://www.blogher.com/loans-social-media-retailers-scrambling-figure-out-how-get-small-business-owners-spend-more-money?wrap=blogher-topics/small-business&crumb=32391
Technorati Tags: small biz, small business, business credit cards