As the economic crisis continues and banks continue to search for ways to turn a profit, it seems that they are beginning to turn their eyes towards small businesses. This comes as the Senate prepares to pass the Credit CARD Act.
Small business enterprises are just one of the many sectors of society that has been adversely affected by the economic crisis which is still affecting the nation today. Lending companies, themselves in dire financial straits, have had to cut lines of credit for businesses. Thus, small businesses no longer have a reliable credit line to fund their daily operations except for their credit cards. Credit card loans have virtually become the norm for small business financing and some businesses are having a hard time keeping up with the monthly bills.
The NSBA or National Small Business Association recently released their survey results, which give a clearer picture of how bad the situation is for small businesses in the country. Participants of the survey were 288 members of the NSBA. Of those who participated, 2/3 saw the interest on their business credit cards increase within a 12-month period. What's more, 41% of the respondents also reported that their credit limits had been slashed by the credit card companies.
It seems that small businesses are the new victims of the credit card interest hikes that private credit cardholders faced and continue to face. Like private credit cardholders, small businesses are asking why they are taking the burden of higher interest rates when banks are getting incredibly low rate loans directly from the money of taxpayers. Some see it as banks getting back their money twice. Some observers say that banks are looking for every avenue to profit as they incur grave losses from defaults and delinquencies on their credit card lines. It just so happens that small businesses are the next in line.
Unfortunately for small businesses, while private credit cardholders have some small hope in the future in the form of the Credit CARD Act that may pass into law this very month, they do not have that luxury. The Credit CARD Act is the government's answer to what many people see as unfair and deceptive practices in the credit industry. The Act, however, contains no provisions that offer protection to small businesses. It looks like small businesses are going to have to start petitioning their lawmakers to draft a similar legislation for them.