Small companies can still get credit. Of course this doesn’t come from the Small Business Administration or bank as a business loan anymore. Now many small companies use credit cards to help. A lot of funding that used to be readily available for small businesses just isn’t really there anymore, and unless you’re running a Fortune 500 business, it’s hard to get the help you need.
Small business credit cards booming
Credit cards are what, as outlined by CNN Money, small business owners are relying on to get credit. Businesses are getting approved for credit cards but not business loans. The first quarter of 2010 saw a reduction of $ 40 billion in lending to small businesses, which is the lowest level since 2008. 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 is within the way?
The normal way a small company gets a loan to get off the ground, or help them expand, is through either a small or mid-size bank. The Small business Administration is something that can help as well. Smaller banks do not have the liquidity to lend and also the SBA stimulus has nothing left. When a business owner applies for a loan, to buy equipment or start a business, they can pledge certain things as collateral, like property. Less credit is available now that property is not too valuable. The only way to get credit then becomes credit cards. If a piece of property isn’t really as valuable anymore, it is hard for a business to get mortgage loan modification to free up cash.
Someone has to have all the benefits
SBA installment loans for bad credit have a seven year minimum. Credit cards will never be paid off when one starts making minimum payments and never quits. The difference between regular credit cards and business credit cards is that business credit cards aren’t under the CARD Act. Big banks are the source of funding for credit cards. Huge amounts of money are lent by JP Morgan Chase, Citibanks, Wells Fargo, and Bank of America. Who got probably the most bailout funds?
Find more info here
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/
