Wednesday, June 3, 2009

Business Credit Card Trends

The country’s overall small business credit is still creeping up due to credit cards rather than other bank loans; this is going on at a very slow rate. This was reported by the SBMA (Small Business Administration) on its yearly reports that end on June of 2008.

This growth though imperceptibly slow, is steady and real. Top analysts have seen business lending swelling within one year. However, the increase was much sluggish compared to last year. The world wide credit problem is creating lower demand in the market. Therefore small businesses are also sluggish. All in all, the overall small business debt yet unpaid went up four points. It went up to the amount of more than seven hundred billion dollars in the one year period. This figure amounts to merely half the growth that was seen from small business credit card companies in the past twelve months.

Although all the information that is provided is still vague (the exact size of these so called “small” businesses that loaned from banks are not clear), what is clear is that the loans in the SBA analysis show those that were below a million dollars and those below a hundred thousand dollars. Specifically, lending that amounts to below a hundred thousand dollars usually come from small business credit card accounts.

But since all of these are trends from June 2008, things are significantly different today. The crash of Wall Street saw top lenders such as Advanta cut back and close small business credit accounts. Also, the new cardholder’s bill passed just a couple of weeks ago by the President Barack Obama has its own impact on these figures.

However, this report still shows a strong increase in the credit card industry at a time when larger sources of loans are slowing down. The biggest banks that lend money to small businesses have more than half of their capital loaned out. It seems that the big lenders are still focusing on credit card lending. This change in the scene might be a signal for a stimulated demand for the small business credit card despite recent losses, such as the closing of the Advanta Corp accounts.

No comments:

Post a Comment