Debt Free News

Credit card debt on the rise

January 12, 2006

According to a new report that became public today, credit card debt is not only a concern for US consumers; it is a huge concern for small businesses. Today, the Small Business Administration (SBA) reported that credit card debt is one of the chief reasons the number of small business in such debt increased has risen a whopping twenty five percent between the years 2004 and 2005. The report is concentrated in the 12 months between the months of June.

According to the SBA’s report, during the above period of time, the amount of small businesses with debt (via loans) under the amount of one hundred thousand dollars rose from 15.2 million to a staggering 19 million. This means most small businesses have credit debt and or credit card debt that is causing them to stay in debt. An impressive seventy percent of these companies is in fact due to credit card debt. Even though the large increase in numbers, the total dollar amount increase was really only at just under 2%. This tells our debt free news department that the study thinks an increasing amount of small businesses are in fact accruing more debt by credit card. Many small companies have turned to credit card debt as a way to pay fro smaller office expenses and business travel. The hard part will be getting out of this debt.

Additionally, even though we have witnesses a slow down within in further areas of small business lending, we see that the small business credit card market is still on the rise. This could very well mean that lenders are not offering the best rates in the slow down, but small companies are still taking out the credit – causing the debt to be harder to get out of even.

In today’s debt report by the SBA, it says that it consulted about 8,800 banks and calculated business loans of up to $1 million to create its report findings. All in all, the SBA found there were about 21 million US small businesses out there that have loans of $1 million or less. The total debt amount for those small business they found with these loans was nearly six hundred billion dollars. Wow.

Now, some of our debt free news report readers may be thinking this is the sign of a stimulated economy, there are actually less loand due to the slowed economy – meaning more debt would be in order if the economy were a bit stronger no doubt.

The study states that a cautious amount of lenders attributed to the slow down of small business loans which were about 5% higher a few years ago.

The report also goes on to say that we could very well see this cautiousness continue in the coming months.

Even a year and a half ago, small business owners would have told you that things were much more optimistic for them. Now that they have this rising credit debt and larger balances on their credit card debt, they are looking for the optimism – but it is still waning.

Additionally, according to today’s new report on small business debt, Bank of America was one of the top small business lenders. This bank loaned a total of about a billion and a half dollars to small business (50% were loans under $100,000).

So, if you are a small business trying to get debt help, check into Bank of America.

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