“America’s small-business owners need credit-card reform—and we need it NOW.”

Entrepreneur Magazine is among the top publications in the field that is near and dear to my heart, given that I have been a practicing entrepreneur (bootstrapper) and am now an entrepreneurship professor at Western Carolina University (WCU).  I’ve also had the opportunity to meet Rieva Lesonsky, Entrepreneur’s former editorial director (at a previous academic conference), and others.  Accordingly, I was pleased to see David Port’s March 16, 2009 article entitled, “APR Hikes Ambush Biz Owners: Card issuers have changed the rules. Do you know how to protect your rate, and take action if necessary?“  (Respectfully, I think the action steps list at the end of the article could be enhanced, however.) 

As an academic, I’ve tried to focus my research on bootstrappers as well as related topics as it pertains to small businesses on “main street” (i.e., anyone who is essentially an underdog).  I am gravely concerned about the consequences that may be associated with changes in terms on the part of all credit card companies relative to the small business economy, lately.  For example, Kevin Johnson’s battle started over issues with American Express a few months ago. 

Most recently, the number one issue addressed on this site has been Chase’s change in terms, imposing a new finance charge that violated its promised promotional rates, and raising minimum payments from 2% to 5%.  I’ll have more to say about some recent developments, but here is a quote excerpted from the aforementioned article, which refers to credit card usage rates by small businesses: 

Small-business owners, who nowadays must rely more than ever on plastic to cover their cash flow and capital needs in light of tightening credit markets. In a survey, the National Small Business Association reports that 49 percent of its members used credit cards in the past 12 months to finance their businesses, an increase of 20 percent. Meanwhile, 69 percent reported that the terms of their credit cards are worsening.

Directly from the National Small Business Association (NSBA) site, you can access a Web-based form that will allow you to write in support of credit card reform via Congressional action.  Please encourage any entrepreneur you know and suggest that he or she participate.   According to the letter, which provides pre-written suggested text (this can be customized), “America’s small-business owners need credit-card reform—and we need it NOW.”  Further information about the aforementioned study can be found directly on the NSBA site (along with an “Issue Brief” pdf).

By the way, in case this is the only post you read as a newcomer to the site, I’m not condoning the use of credit cards for start-up capital, and I admonish students (and practicing or would-be entrepreneurs) to be very, very, careful and avoid going down that path.  You can read more about small businesses and credit cards in a report that I have published here: “Credit Cards and Small Business Usage Report.”