Small Businesses Left Out of Credit Reform Bill

   

Posted: Jun 30, 2009

People who are struggling with consumer credit debt can at least take heart from the idea that, unlike small-business owners, they'll be getting relief from some controversial practices early next year.

A recent New York Times report focused on the politics behind efforts by Senator Mary Landrieu (D-LA) and others to include provisions for small-business owners in the recent credit card reform bill that was signed by the president.

"Small businesses aren't necessarily consumers. They have different failure rates, cash-flow needs, credit needs. Small-business credit cards are underwritten differently, small businesses behave differently," one unnamed Capitol Hill aide told the Times.

As a result, consumers will see limits on practices such as abrupt interest-rate hikes and credit-limit cutbacks, but small businesses won't. Recent statistics have also shown that consumers have become less dependent on their credit cards, while business owners don't necessarily have that luxury.

For example, a recent United Press International (UPI) report cited government statistics showing that more entrepreneurs are using their credit cards to cover basic costs. However, Senator Landrieu noted in the article that small-business hiring is the factor that will help end the recession.