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Use of personal credit cards may explain drop in small business loans – Cleveland Business News – Northeast Ohio and Cleveland – Crain’s Cleveland Business August 6, 2012

Posted by sandyclaus in Uncategorized.
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Moreover, Prof. Shane adds, a National Federation of Independent Business report “shows that the fraction of small business owners who use personal credit cards for business increased from 42 percent in 2009 to 49 percent in 2011, while the fraction who use business credit cards declined from 64 percent to 59 percent.”

Policymakers, he writes, “need to figure out how much of the decline in small loans to businesses comes from the shift from business to personal credit cards. Small business lending has declined to levels not seen since 1999, erasing the runup in credit during the loose financing of the early 2000s and suggesting that the small business credit pendulum has overshot its correction.”

via Use of personal credit cards may explain drop in small business loans – Cleveland Business News – Northeast Ohio and Cleveland – Crain’s Cleveland Business.

 

<<Sandy’s Note: This puts the effective cost of loans for small business somewhere around where they were at the height of the 1970s high interest rates. Also, cards are unsecured loans, meaning ownership in the business may not be at risk for some endeavors.  I could see this as being very attractive to some businesses.>>

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