Banks Pick up Credit Card Distribution

The Wall Street Journal reports that banks have mailed more credit cards to small businesses than in previous months. These include Chase, Barclays, Citibank and Bank of America. Could this mean banks are starting to relax their credit requirements?

One sign that could support the improved conditions is that the Small Business Administration (SBA) has seen its 7(a) and 504 loans go up by more than 60% since March. However, lending hasn't caught up to past rates, these actions indicate good signs.

Despite the good news, bank rules for loans still remain strict. The article states, "Chase says it is prudent about whom it grants cards to, while AmEx's direct marketing efforts have fallen off dramatically." The article goes on to say this could be a test on a smaller scale to see how things turn out before taking a bigger gamble.

How to Manage Credit Cards

Make sure you study your credit card terms and any new ones that come in. Of course, pay off your credit cards every month. Here are some of our blog entries covering credit cards for more details:

• Check Your Credit Cards: Discusses Credit Card Act of 2009 and the fine print.
• Did Your Small Business Credit Card Terms Change: In a survey, 75% of small business owners report their credit card terms are worse. Read up on the credit card terms and other options to get cash flow.
• Ducking Credit Card and Line of Credit Abuse: Some businesses use their credit cards to the point where they lose control of them. Get tips on how to avoid this and what to do if it happens.

Explore other Cash Options

A credit card helps in purchasing smaller items so you don't have to plunk down the cash as soon as you make the buy. Instead, you put it off at least a month by paying the credit card right before the due date (too early is not better in this case).

If you let the credit card pile up to the point where you can't pay it off at the end of the month or within a couple of months, the rates will get you. It could be a higher price to pay than looking for other loan or finance options to get more cash flow. Here are a handful of posts that explore such options:

• Cut costs: Hold on to as much cash flow as possible.
• Look into invoice financing (accounts receivables financing): In this case, you don't owe anyone anything. The money is already yours.
• Follow tips for more cash flow: Rather than going for a loan or anything... here's what you can do to keep cash flow flowing in your business.
• Renegotiate contracts: The worst the vendor or lender can do is say, "No."
• Investigate other options for working capital: Banks aren't the only place.