July 16, 2009
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News: Small Business Owners Unprotected
Consumers have tired of the constant beating of the financial industry's deceptive and unfair practices pertaining to credit cards. In the wake of the new reform that will inhibit this underhanded activity. Unfortunately, in their quest to get this law passed quickly, lawmakers made two major mistakes. First, they left a nine month window for credit card companies to make interest rate changes and increase fees that would be considered illegal under the guidelines of the new law. Secondly, they conveniently overlooked one category of the credit card business, the small business sector. Whether you call it an oversight or a deliberate attempt to exclude, it blindsided many small business owners and has left them on a sinking ship with no life raft.
Small business loan accounts are a higher risk for lenders. When times are tough, owners tend to satisfy their personal debt responsibilities before the business needs. With personal card delinquencies setting new records, it only makes sense that business credit card delinquencies have risen sharply also. A recent report by the American Bankers Association's (ABA) indicates that consumer debt with delinquencies of 30 days or more rose to 3.35% up from 3.16% for the first quarter of 2009. Eight different loan categories including auto and recreational vehicles comprise this category which does not include credit card accounts. The card account category also rose to record breaking highs of 4.75% of all accounts, compared with 4.52% in the fourth quarter of 2008. With these record breaking numbers in consumer personal debt delinquencies, it would then follow that business card accounts would equally or higher.
Increasing numbers of small businesses going out of business has lead to the tightening up of many lenders who are not willing to take the risk. Business credit cards are not as easily obtained in today's financial world and only business with prime credit are considered. Small business owners need help.