Small Business Credit Cards – Credit cards are now become an easy source of working capital for start up entrepreneurs to buy small to medium- size assets like office equipment (laptop computers, printers and the like) and furniture and fixtures (chairs and tables, air-con, etc) and paying utility bills like electricity, water and broadband internet connection. While this is not encouraged, many find the easy “payment terms” or “installment financing” through credit card billing as a convenient and fast way to augment their cash flow.
The entrepreneur however, sees only a side of the coin and forgets the high interest and penalties the credit card companies charge in the event that the account is either paid partially or the “minimum payment due” is availed.
The credit card purchases, whether with or without the knowledge of the entrepreneur, become costly and turn out to be an added liability that put further pressures on his dwindling cash flow of a start up small business.
This dilemma being faced by credit card users when the monthly due is not met, will be a thing of the past if the Senate Bill 166 sponsored by Senator Chiz Escudero become a law. The bill will stop credit card companies practices that impose high interest charges and penalties.
The bill aims to put a cap on the interest charges to 1% per month or 12% per annum as against the current practice which range from 2.5% to 3.5% per month. Not only that, if one examines their statement of accounts these charges are compounded, which means that the amount is carried over month after month until the account is fully paid.
Since the suspension of the Anti-Usury Law in 1982, many credit card companies have resorted to their current practice of charging high interest and penalties on outstanding credit card accounts. If passed into law, the Senate Bill 166 will benefit not only the start up entrepreneurs but people who have relied on their credit cards to make unplanned but important acquisitions which normally cannot be made due to lack of funds to use.
Many are also hoping that Senate Bill 166 will not only focus on the onerous interest charges and penalties but also on the practices of most credit card companies that leave credit card members no options to manage their accounts well. But for the meantime, we stay confident that an honest to goodness credit card services will come. And small business credit cards will ultimately become a big source of start up business loans.
Source: Business Option By Teodoro P. Estacio (Manila Bulletin)