Small businesses rely heavily on credit cards

Small businesses can nevertheless get credit. This credit doesn’t come as a business loan from a bank or Small business Administration. Now many small businesses use credit cards to help. Unless you’ve a Fortune 500 company, there isn’t funding accessible to you anymore.

Small business credit cards happening more and more

Credit cards are what, as outlined by CNN Money, small business owners are relying on to get credit. Businesses are approved for credit cards as very easily as they are denied for business loans. Since 2008, the $ 40 billion in lending to small companies within the first quarter of 2010 was the lowest. Since June this year, there is no more money for lending within the stimulus package, and in 2009, not even half of small companies got the lending they needed.

What’s stopping it?

A small bank that gives out a loan is how small businesses discover a way to succeed. The Small business Administration is something that can help as well. Smaller banks do not have the liquidity to lend and the SBA stimulus has nothing left. When a business owner applies for a loan, to buy equipment or start a company, they can pledge certain things as collateral, like property. Less credit is accessible now that property isn’t really too valuable. The only way to get credit then becomes credit cards. When the property no longer has value, companies no longer can get mortgage loan modification to try and get some cash.

Someone has to have all the benefits

An installment loans from the SBA contains a minimum term of seven years. If one starts making minimum places only, credit cards will never get paid off. Business credit cards not being under the CARD Act is the only difference between business credit cards and regular credit cards. The main source of funding for credit cards is the biggest 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 info available at these sites

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/