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Small business credit card

Question: We started a small business in July 08. We received an Advanta business credit card with a $20,000 credit line. It was perfect for me and 3 employees. We paid our balance every time. We were notified this week that Advanta was closing all business credit card accounts. Do you know of this? I tried Chase, CITI, and Bank of America for replacement cards but was denied because of too many credit requests on my personal credit report. Any suggestions what to do? This is really bad timing in the life of the business that otherwise is doing well. William, Fort Collins, CO

Answer: Well, you have plenty of company. After posting a $76 million loss in the first quarter, Advanta announced it was closing more than 1 million small business owner credit card accounts.

In the latest twist in the credit crunch, credit card companies are wary of small businesses. For instance, almost two thirds of small business owners said their interest rate had gone up over the past 12 months, and 41% reported that their credit limits were reduced, according to latest survey by the National Small Business Association.

The Credit Card Accountability Responsibility & Disclosure Act recently signed by the Obama only applies to consumer credit cards. Small business cards aren't covered. In practical terms, the credit card reforms protect you if you use your personal credit card for business. But the new credit card rules don't come into play for small businesses that are incorporated, limited liability corporations, and the like.

You can learn more about the current state of small business and credit cards at this Business Week story. To research getting a new card, here is a list of terms from 14 business card issuers (although some have already turned you down). I would also check out your local credit union or community bank. Both of these neighborhood institutions tend to work with local businesses. For instance, I just checked out the website of the Community Development Financial Institution that's a few blocks away from where I work in St. Paul and it offers corporate credit cards.

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