Small Business v. Personal Credit Cards: How They're Different

ABC News
August 24, 2013

By ODYSSEAS PAPADIMITRIOU, CEO of CardHub

> When Rep. Nita Lowey, D-N.Y., introduced the Small Business Credit Card Act of 2013 to Congress back in June, she was attempting to right a wrong that has persisted since the original CARD Act took effect in October 2010.

The landmark law, which has increased transparency and bolstered consumer rights throughout the credit card industry, does not apply to credit cards branded for small business use. And while Lowey's bill has the potential to correct this oversight, it has only a 1 percent chance of being enacted, according to GovTrack.

The roughly 37 percent of small business owners who leverage credit card debt each year must therefore learn how to get by without important legislatively provided rights if they wish to achieve debt stability and avoid losing money. CardHub conducted a study analyzing the small business credit card policies employed by the nation's 10 largest issuers, and the five major takeaways are listed below.

Read more

Scientific Opinion Poll Finds Micro Businesses Optimistic about the Future of their Business and Economy

Poll of 470 businesses with 10 employees or fewer shows they’re key drivers of our economy and looking to grow, however nearly six in 10 who need credit to do so say getting it is a serious problem

Washington, DC, Oct. 9, 2012—A scientific opinion poll released today shows the majority of the country’s smallest businesses, those with 10 employers or fewer, are optimistic about the future of their business and the economy, despite recent reports claiming otherwise. What’s more, the survey clearly shows these micro businesses have a significant impact on our economy, with over half reporting increased sales or revenues over the last two years and another 50 percent planning to hire within the next two.

The poll, conducted by Greenberg Quinlan Rosner Research for the Association for EnterpriseOpportunity, the National Association for the Self-Employed and Small Business Majority, alsorevealed that in spite of this optimism, the contribution these businesses can make to our economic recovery is at risk. More than two-thirds report that availability of credit for micro businesses is a problem, and four in 10 who applied for credit last year were turned down, despite the fact that three in five say they need up to, if not more than, $50,000 in the next three years to sustain and grow their business.

 “These smallest businesses make up 95 percent of all small businesses, so they are truly the ackbone of our economy and the ones who will pull us out of this recession,” said John Arensmeyer, founder & CEO of Small Business Majority. “While work has been done to shore up credit for small businesses, these micro business owners are still struggling to get the help they need. It’s important policymakers realize how vital these businesses are to our economy and do what needs to be done to help them succeed.”

The poll also sheds light on who these very-small-business owners are, and how they impact our

economy and its recovery. The poll refutes the perception that micro businesses are merely

hobbyists selling tchotchkes on the Internet. Nearly three-quarters of those surveyed report their

micro business as their sole source of income and 57 percent have been in business for 10 years or longer.

“Microbusiness owners have spoken loudly and clearly. These poll findings are a striking

testament to the vital vehicle microbusinesses are for enduring financial stability for many

individuals and families across the country,” said Connie Evans, CEO of the Association for

Enterprise Opportunity. “These enterprises are a great boon to their local communities, and also

to the nation’s economic and employment health. Microbusiness owners know the power they

carry, and so must we. The heart of America beats on Main Street USA, and that is why it is ever

critical to equip microbusinesses to achieve sustainability and long-term success.”

Despite our overall slow fiscal recovery, 50 percent of these owners say their business is doing

well, compared with only 10 percent who say they aren’t. Additionally, more than half employed a contractor or 1099 employee in the past year, and nearly a third have hired a full-time employee in the past year. These businesses greatly stimulate their local economies, as well, with nearly three-quarters reporting that at least some, if not all of their customers are local.

Additional findings from the poll include:

• A strong majority of all micro business owners surveyed— nearly seven in 10—believe

their business will be faring well over the next couple of years. An overwhelming 81

percent of respondents under 40 feel the same way. What’s more, 67 percent of owners

in that age group say they plan on hiring, along with 58% of minority business owners.

• 67 percent of respondents under 40 say their business is doing well.

 

• Micro businesses are not just hiring part-time, low-paid workers: more than six in 10

spent over $50,000 in payroll this year and 54 percent spend more than $10,000

annually on non-payroll expenses such as equipment, computers, office supplies and

more.

• Businesses that are eager to grow and hire are notably more likely to have trouble getting

the credit they need than businesses that have been around longer and do not need

credit: 58 percent of businesses that actually need credit say getting it is a serious

problem for their businesses.

• 67 percent of respondents view credit availability as a problem for small businesses in

general. But when taking into account only owners who say they need credit, a 58 percent

majority view the availability of credit as a serious problem for their business.

• Nearly half, or 48 percent, said marketing and sales topped their list of services they’re

most in need of, while tax preparation (27 percent) and technology (21 percent) came in

second and third.

• These businesses are politically diverse: 49 percent identified as Republican or lean

Republican; 35 percent identified as Democrat or lean Democrat; 10 percent identified as

independent and 7 percent identified as “other.”

This poll reflects an Internet survey of 470 small business owners, drawn from Research Now

Panel and conducted by Greenberg Quinlan Rosner Research for the Association for Enterprise

Opportunity, the National Association for the Self-Employed and Small Business Majority. The

survey was conducted from Aug 4-8, 2012. The overall margin of error is +/- 4 percent.

 

 

Crowdfunding can provide new financing option for women and minority firms

WEBINAR June 21, 2012

25% Discount for Small Business Chamber members

In April, President Obama signed the Jumpstart Our Business Startups Act. A provision in the law establishing crowdfunding as a mechanism to spur start-ups has the potential to significantly help minority firms.

A study conducted by the Commerce Department concluded that women- and minority-owned firms “experience higher loan denial probabilities and pay higher interest rates than white-owned businesses even after controlling for differences in credit-worthiness, and other factors.” The failure rate of minority businesses is higher than that of nonminority firms, according to the Commerce Department’s Minority Business Development Agency, partly because of lack of capital.

But crowdfunding can potentially level the playing field, opening new sources of business capital and revenue for women- and minority-owned firms.

What is crowdfunding and how can it work to help your business in the future will be the subject of a webinar on June 21^st conducted by William Michael Cunningham of Creative Investment Research.  Mr. Cunningham is a social investment advisor, owner of MinorityFinance.com and the author of the forthcoming book “The JOBS Act: Crowdfunding for Small Businesses and Startups.”

When:  Thursday June 21, 2012
3:30 to 4:30 PM (ET)

Cost:  $75 for SCSBCC members / $100 for non-members

REGISTER HERE

Hope for bipartisanship and small business?

If your feet felt cold this morning, it’s because Hell has frozen over.

Last evening the U.S. House passed overwhelmingly (407-17) a piece of President Obama’s American Jobs Act.  While the Senate Republicans yesterday blocked the transportation part of the jobs bill, House Republicans and Democrats solidly supported changing Security and Exchange Commission (SEC) regulations to allow small businesses easier access to private investment. 

Last year supporters, including the South Carolina Small Business Chamber, of a concept called “crowdfunding” proposed by the Sustainable Economies Law Center lobbied the SEC for reducing strict registration requirements for small businesses to seek investors for security offerings up to $100,000 with $100 maximum per investor.    We felt that the onerous registration process was there to protect investors.  So if the maximum an investor could lose was only $100, then such requirements should also be minimal.

The SEC listened as did the Administration.   The President’s jobs bill included the general concept of responsibly reducing SEC regulatory burdens if investor risk was low.   And the SEC established an Advisory Committee on Small and Emerging Companies that had its first meeting Monday of this week.  On its agenda was the concept of “crowdfunding” as a vehicle for small businesses to better access capital.

Not waiting for the SEC, last evening the House passed H.R. 2930 with some amendments.  The bill takes our original “crowdfunding” proposal and dramatically raises the cap to $1 million on the amount of funds allowed to be generated through this process that would include internet and other forms of advertising. The cap on how much each individual investor can give was raised to $10,000. 

Small businesses following the “crowdfunding” guidelines would not have to register with the SEC.

Now this bill goes to the Senate and we’ll have to see if that body can also get over its partisan divide.  If it can, then a whole new opportunity for small businesses to meet their capital needs will become a reality.

NFIB buys a Lincoln

The pretender small business organization is at it again representing the interests of its real patrons—big business and the wealthiest Americans. The National Federation of Independent Business (NFIB) has hired former Democratic Arkansas Senator Blanche Lincoln to be the front stooge of its latest publicity stunt, Small Businesses for Sensible Regulations.

Lincoln’s job is to distract the public from the real reason small businesses aren’t doing the hiring we need to lift our economy—lack of consumers and access to capital. Instead the mistress of the NFIB says the problem is that handy boogieman FEDERAL REGULATIONS.

But these nasty regulations don’t seem to bother two segments of our economy that are booming.

Luxury items for the wealthy are flying off the shelves and from the showrooms. According to a New York Time's story today by Stephanie Clifford, “the luxury category has posted 10 consecutive months of sales increases compared with the year earlier.”

Sales for the luxury big retailers are going up, up, up. First quarter sales this year for Tiffany’s were up 20%. LVMH (Louis Vuitton and Givenchy) sales rose 13% for the first half of the year. PPR (Gucci and Yves Saint Laurent) sales jumped 23% for the first six months.

BMW quarterly profits have more than doubled and the first half of the year saw Porsche profits rise 59% and Mercedes $200,000+ S-Class sedans sales increased 14%.

Obviously cash in the pockets of the wealthy drives their spending to boost the luxury market. The continuation of the Bush tax cuts for the top two income brackets and the Dow being up about 80% since March of last year have created luxury consumer spending.

But instead of helping put cash in the pockets of the average consumer, Congress and the President are pulling out over $2 trillion from our economy--money that would have ended up in the hands of workers, the unemployed and seniors. These folks then would have spent the money in our small businesses. As these sales decrease so will our jobs. Our consumer spending problem is due to simple economics 101 and not to Federal regulation scapegoating.

The other segment of our economy doing well, that we mere mortals can identify with, is the pawn shop industry. When you don’t have a job and a small business can’t get a loan or a line credit, pawn shops are the new banks.

According to CNNMoney’s Catherine Clifford, small businesses that are shut out of a small loan or lines of credit from traditional financial institutions are turning to pawn shops. Expensive watches, gold and other big ticket items get the small business owner with cash flow issues the money to make payroll. This access to capital for small business is a very serious problem but it has everything to do with banker fears of risk and depreciated equity assets of small business owners—not Federal regulations on the books.

Lincoln and the NFIB are on a mission of distracting Congress and the public from what our country should be doing to get the economy moving. But they’ll be well paid for their efforts while the rest of us visit the pawn shops.