Here Comes The Microbusiness Credit Squeeze
Nov 3rd, 2008 | By Dawn R. Rivers | Category: EconomyWhile members of Congress have been doing a certain amount of yelling about small business owners who cannot access working capital to do things like purchase inventory, make capital investments or meet payroll, another development in the credit landscape is beginning to threaten microbusinesses. Some of the nation’s largest banks, already in trouble over securitized mortgages and otherwise poorly-managed risk, have turned their attention to their credit card practices in further attempts to staunch the bleeding.
Given the economy’s poor performance and rising unemployment, you can’t blame them for worrying about the ability of some of their customers to pay their credit card bills. In response, they are tightening acceptance standards, slashing lines of credit and closing inactive accounts – sometimes in ways that damage their customers credit scores. And microbusiness owners are going to really feel the pinch here, because they are getting shut out of almost their only source of working capital. There’s little to be done about it, either, since SBA guaranteed loan programs don’t feature any sort of working capital line of credit. What’s Congress going to do about it? Probably nothing; the odds are that they won’t even notice.
