Small Businesses Have More Credit Card Debt
A newly released report by the Small Business Administration (SBA) finds that small businesses have acquired more outstanding debt. From June 2004 to June 2005, both the number and dollar amounts of small business loans rose 25 percent. Most of it was credit card debt.
All commercial lending institutions accounted for the numbers, not just SBA loans and the increase in business debt was especially prevalent in the smallest businesses, under $100,000. Credit cards accounted for much of the debt.
Credit is essential for buying a small business due to the capital needed to buy and maintain inventory, hire employees and have funds available for future growth, but credit cards provide the most expensive form of credit, along with having unnecessary risks.
When using personal credit, enough must remain in case of emergencies, or not only personal but business stability may be jeopardized and everything would be lost should the business fail. The loan would need to be repaid and the loss could include both personal and business assets.
All commercial lending institutions accounted for the numbers, not just SBA loans and the increase in business debt was especially prevalent in the smallest businesses, under $100,000. Credit cards accounted for much of the debt.
Credit is essential for buying a small business due to the capital needed to buy and maintain inventory, hire employees and have funds available for future growth, but credit cards provide the most expensive form of credit, along with having unnecessary risks.
When using personal credit, enough must remain in case of emergencies, or not only personal but business stability may be jeopardized and everything would be lost should the business fail. The loan would need to be repaid and the loss could include both personal and business assets.
Read more at: Small Businesses Have More Credit Card Debt
posted by e-borneo.com @ 3:45 PM
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