WhatTheyThink Blog
Card Companies Restrict the Proffering of Plastic; 7 of 10 Small-Biz Owners Look for Growth in 2009
By Patrick Henry
Published: June 19, 2009
If you use credit cards to help cover the everyday expenses of running your small business, you’re not alone. The National Small Business Association says that nearly 60% of America's small firms rely on plastic as a quick and convenient source of operating capital.
And if using your cards for business purposes is tougher than it used to be, you have company there as well. A story in today’s New York Times reports that moves by banks and credit card companies to limit card use is depriving many entrepreneurs of the one source of cash they could depend on when all others failed.
In one case, a Florida business owner saw her interest rate rise above 30% while her credit limit was slashed from $30,000 to $5,000.
According to the story, three-quarters of small business say that they have seen large cuts in card limits over the last six months. This coincides with a general drying-up of business loans from banks and other sources of commercial credit.
The credit card delinquency rate among small business owners isn’t drastically higher than defaults by consumers (12% vs. 10%). Unfortunately for the small business community, however, these firms were not included in the credit card reform legislation signed by the Obama administration last month.
On a brighter note, despite the credit crunch and all other recession-related setbacks, 70% of small businesses anticipate moderate to significant growth in 2009. This is according to a survey conducted by Constant Contact Inc. for the Association of Chamber of Commerce Executives, SCORE, and the Association of Small Business Development Centers.
Significant growth was foreseen by 23% of respondents, while 47% predicted that growth would be moderate. Of those anticipating growth in 2009, nearly half (47%) said they expected to hire additional employees.
Patrick Henry, Executive Editor for WhatTheyThink.com is also the director of Liberty or Death Communications, a consultancy specializing in research, education, promotional, and editorial support services for the printing and publishing industries.
Patrick Henry is available for speaking engagements and consulting projects. To get more information contact us here.
Please offer your feedback to Patrick. He can be reached at patrick.henry@whattheythink.com.
Back in the day I was always surprised by printers who didn't accept credit card payment. I assume they were concerned about the fee to the card companies. I helped set up a printer who went with a pay by credit card with the order. Everyone at the time said we were nuts. He made lots and lots of money and always had cash in the bank on the day the job left the shop.
When you consider how late payers have destroyed many businesses the fee you pay the credit company is value received. I saw so many printers who were in the banking business, not the printing business.
If you go credit card or COD only, Amex or Visa assumes the risk of late payment. I knew of one broker who paid over a $1,000,000 a year purchases with his Amex. He had enough frequent flyer miles to travel anywhere.
Patrick, I wonder if you have seen anything to suggest that commercial printers are accepting electronic fund transfers or credit cards, and moving away from "terms" and "credit checks."
Back in the day I was always surprised by printers who didn't accept credit card payment. I assume they were concerned about the fee to the card companies. I helped set up a printer who went with a pay by credit card with the order. Everyone at the time said we were nuts. He made lots and lots of money and always had cash in the bank on the day the job left the shop.
When you consider how late payers have destroyed many businesses the fee you pay the credit company is value received. I saw so many printers who were in the banking business, not the printing business.
If you go credit card or COD only, Amex or Visa assumes the risk of late payment. I knew of one broker who paid over a $1,000,000 a year purchases with his Amex. He had enough frequent flyer miles to travel anywhere.
Patrick, I wonder if you have seen anything to suggest that commercial printers are accepting electronic fund transfers or credit cards, and moving away from "terms" and "credit checks."
BTW I love your blog!
Well the fact that more and more business owners are
struggling is no secret.
The most important thing right now is for small
business owners to realize that this is the time to get
creative!
Sincerely,
Ilya Bodner
Small Business Owner
Initial Underwriting Group
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