Regulating commercial credit cards for small business owners.

7/29/2011

While federal law restricts penalties and sudden rate changes on consumer credit cards, legislation doesn't enforce similar restrictions on corporate or business credit cards.

According to the Wall Street Journal, more than 80 percent of small businesses in the United States use credit cards for capital, and 64 percent of these use business credit cards. While lawmakers want to extend consumer card protections to business cards, credit companies say that imposing the restrictions would limit their ability to approve riskier cardholders, limiting positive impact on small business growth.

Analysts expect business credit card use to increase in the coming moths, with more cardholders accumulating debts between $10,000 and $25,000. Proponents of cardholder protections for business card users contend that doing so allows small business to expand and hire more employees, though bankers continue to assert that consumer and commercial lending and credit are two very different things and must be managed differently.

While business credit cards may see improvement in policies, it's unlikely the adjustments will be as sweeping as those in the consumer world. Maintaining cash flows for small businesses is key to managing the small business growth arena, which has generated 64 percent of net new jobs over the past 15 years.