Wednesday, August 29, 2012

Business loans

Small business owners have been virtually shut out of borrowing from banks. The big ones (too big to fail) used those billions they got in bail-out funds to buy up other banks and pad their own balance sheets. Virtually none of those billions were allocated to small business loans.

Besides refinancing personal assets, many small business owners borrow with their personal credit cards rather than use the business credit cards issued by banks. Consumer cards have more protection on fees, rate increases and notification of changes than business cards.

If a credit card is lost or stolen, consumers are only liable for $50 and some not even that. Many banks have "make your customer whole" policies, meaning customers don't pay anything on a lost or stolen card. That's not always the case with business credit cards.

According to one report I read recently, more small business owners use personal credit cards in their operations than ever before. It said that 49% of small business owners are using personal cards for business, compared to 42% in 2009. Entrepreneurs find a way.

As with all credit, be sure to understand the terms and be careful not to get into the habit of making a minimum payment. Above all don't use several different cards. Credit cards can be a blessing or a curse. Use them wisely!

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