Small businesses have to get credit still. This credit doesn’t come as a business loan from a bank or Small business Administration. Now numerous small businesses use credit cards to help. Unless you’ve a Fortune 500 business, there isn’t funding available to you anymore.
Small business credit cards happening increasingly more
Credit cards are what, as outlined by CNN Money, small business owners are relying on to get credit. Companies are approved for credit cards as very easily as they’re denied for business loans. The lowest since 2008, the first quarter of 2010 had $ 40 billion in lending to small businesses. Since June this year, there is no more money for lending within the stimulus package, and in 2009, not even half of small businesses got the lending they needed.
What’s stopping it?
A small bank that gives out a loan is how small businesses find a way to succeed. The Small business Administration is something that can help as well. Smaller banks don’t have the liquidity to lend and the SBA stimulus has nothing left. When a business owner applies for a loan, to purchase equipment or start a company, they can pledge certain things as collateral, like property. Less credit is accessible now that property isn’t too valuable. Credit cards then become the only source of credit available. Businesses can’t free up cash with mortgage loan modification when the property doesn’t have anymore value.
Someone uses all the benefits
SBA installment loans have a seven year minimum. Credit cards, on the other hand, can take forever to pay back if one gets locked into making only minimum payments. The difference between regular credit cards and business credit cards is that business credit cards aren’t under the CARD Act. Credit cards are funded mostly by big banks. Citibank, Wells Fargo, Bank of America, and JP Morgan Chase are some of the banks that lend a lot to credit cards. Who got one of the most bailout funds?
More about this topic at these websites
CNN Money
cnn. com/2010/07/14/smallbusiness/bernanke_lending_credit_cards. fortune/
NY Times piece about SBA loans
boss. blogs. nytimes. com/2010/07/11/s-b-a-lending-plunged-in-june/
