Lenders are tightening up and cards are being eliminated…
With banks tightening the strings on loans to individuals and businesses, entrepreneurs may find that they have to rely more heavily on credit cards, essentially running up their personal debt to finance new business ventures or to cover the cost of existing ones. At the same time, credit card limits that were once plentiful are being reduced, meaning business owners may not have access to the necessary funding required to operate or maintain their business. In addition, many lenders are raising the minimum credit score required for new lines of credit or eliminating their business card products altogether.
According to a Federal Reserve Board survey, 65% of U.S. banks have tightened standards on credit card loans and more than 36% have increased the amount they charge above-and-beyond the prime interest rate. Considered higher risk to credit card companies, small businesses may see their credit limits cut. Not only will entrepreneurs find it more difficult to secure funding but even long-standing business owners, who rely on credit cards to supplement their working capital, may suffer. Texas-based Cullen/Frost, for example, has withdrawn lines of credit from customers and raised rates for loans on others. “We have tightened from the standpoint that we get paid for the risk,” said Dick Evans, chairman and CEO, whose bank focuses primarily on business lending and had more than $13 billion in assets last year.
Many major credit card issuers are eliminating their business card products as well. According to Jeremy Panizzoli, President and CEO of ASAP Credit Card.com, “Citi, Chase, First National Bank of Omaha, and American Express have all completely eliminated their business card products from the Internet marketing channel. Although these offers may still be available direct, they’ve suspended online advertising and have asked major credit card websites to completely remove their business card products.”
Although they’re getting more difficult to find, small business credit cards are still available to struggling business owners. Advanta specializes in business credit cards and provides several competitive offers. Discover and Capital One have several competitive offers remaining as well.
* See our complete list of business credit cards >