Slashed limits and higher rates are having a heavy impact on small businesses that rely on credit cards to keep their companies running.
As of April, 59% of small businesses relied on credit cards, an increase from 44% at the end of 2008, the New York Times reported citing data from the National Small Business Association. Revenue from the use of credit cards by small businesses account for 11% of Visa and MasterCard's revenue, according to the publication. But lately, entrepreneurs said they have to seek out other financing options.
Small businesses were not included in the credit card reform legislation signed by President Obama in May. The new rules, which go into effect in 2010, limits certain fees and rate increases on existing balances. Several senators are advocating extending the rules to small businesses.
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Meanwhile, credit card delinquency among small business owners is more than 12% compared to nearly 10% for consumers, according to The Nilson Report, which tracks the credit card industry.
Banks said applying the credit card reform law to small businesses would further restrict access due to the inability to manage risk as a result of rising defaults, the New York Times reported.
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