SBA sees rise in small business credit card use
Faced with uncharted economic threats, small businesses responded in 2008 by taking out fewer small business loans and relying more on credit cards, according to a report by the Small Business Association.
“Availability of business credit cards is one of the major contributions by the lending institutions to make credit more available," says SBA economist Charles Ou, one of the study’s co-authors.
The change reflects to some extent the changing nature of small businesses that increasingly technology-driven companies with far less overhead than traditional businesses. Internet businesses or home-based companies have fewer hard assets like machinery, real estate and vehicles.
With tightening standards on bank loans, credit card loans are an easier source of revenue for many of these smaller businesses. American Experess, Capital One and JP Morgan Chase, all credit card lenders, are among the top overall lenders to small businesses, the report stated.
American Express offers several options for small business credit cards, including its trademark Gold Card.
Small business credit card holders are not directly impacted by the Credit Card Act of 2009.
