Small Businesses Getting Some Attention From Credit Companies

It seems that major credit card companies are once again warming up to small businesses. Not too long ago, the small business credit market froze up. The credit card crisis and the ensuing defaults made credit card companies wary of risky credit card borrowers. They pulled away from these risky borrowers and one particularly hard hit sector was small businesses. The situation is best exemplified by Advanta’s freezing of one million accounts. Advanta was a credit company specializing on providing credit cards to small businesses. Since then, small businesses have had very little luck in getting credit cards, until now.

Mintel Comperemedia is a Chicago based company that tracks direct mail marketing and, according to them, credit card offers for small businesses increased in July and August compared to the previous months. The specific banks doing the marketing were Citibank, Bank of America, Barclays and Chase. The number of credit card offer mailings has also remained flat in 2009. This is a definite improvement compared to the trend in 2008 when business card mailings dropped by 82%.

Another major credit company has also recently decided to join in as well. Chase Card Services of JPMorgan Chase announced last week that the company would be launching four new credit card lines specifically designed for small business. The line up includes one charge card with pay-in-full features which will be a direct competitor to the Gold business charge card of American Express.

These current developments are being seen by analysts and economists as a sign that the credit card industry is finally beginning to warm up. Curtis Arnold, the founder of credit card tracking and rating website Cardratings.com, said “For months, we haven’t had much news, and, if anything, we’ve had a lot of negative news – it wasn’t long ago that Advanta froze one million accounts”. About the recent announcement of Chase to release four new credit card lines for businesses, one of which will directly compete with American Express, Arnold considers it as a major announcement “in and of itself”.

Another positive sign is the increase of more than 60% in average weekly volume since March of the 7(a) and 504 loan at the Small Business Administration located in Washington DC. Chad Moutray, chief economist of SBA said, “Although lending is down well over 50% year to date, we’re now seeing it move in the right direction”. Regarding the recent announcement of Chase, “I’m not surprised that Chase, or any bank for that matter, is jumping at the chance to pick up small-business customers… It’s a good market for them to be in”, he said.