Appeared on October 28, 2008
Edward Nelling, associate professor of finance in the LeBow College of Business at Drexel University, said this is yet another effect of the credit crunch.“Under normal circumstances, a small business could move on to another company or a bank,” Nelling said. “But bank credit has dried up and credit card companies have all increased rates.”The most difficult part for small businesses is that their company’s profitability and credit history are not a major factor in the decision to increase rates.“Issuers are looking ahead even if the customer’s payment schedule has been good, they are predicting more risk,” Nelling said. “Even if the risk for your business hasn’t changed, you bear the brunt for more risky customers.