Small Businesses Gain Revenue Using Credit Cards
Small Businesses Earn More By Using Credit Cards?
The following is a headline on dated July 16, 2010:
“Small Business Credit Card Use Creates Jobs”
This conclusion comes from a report that they quote at length. This report was conducted for the American Bankers Association by Keybridge Research, an international economics and public policy consulting firm.
The report claims that small business use of credit cards is directly or indirectly responsible for the creation of 1.6 million jobs.
“The increase in small-business credit card use from 2003 to 2008 contributed directly to the creation of 592,000 small business jobs and an additional one million direct or induced jobs throughout the US economy.”
Now, most anyone who’s been around the block a time or two knows that research can prove anything, if:
1) you use the right data to prove your point
2) you ignore any data that doesn’t prove your point
3) you get paid enough to get the right results.
The other thing that needs to be done when you read such a report is say, “Who benefits from this?” Could a report done for the American bankers somehow be good for the American bankers who issue the credit cards and earn usury interest rates on them? Could the results be backing up a desired conclusion?
Who’s Zoomin’ Who?
So, who’s zoomin’ who here, to borrow a line from Aretha Franklin. Should small business owners take on exorbitant amounts of short term debt in order to hire people who are long term obligations? Should they be using expensive money to hire employees that will become very expensive assets if the health care bill goes through as it is?
Who will benefit from using credit cards to run their businesses? That’s up to you to decide. And who will benefit the most if you do? You can answer that question too, but it certainly won’t be the small business owner.
Maybe the truth of the matter is that when small businesses go looking for credit, they are running into an ever increasing amount of resistance by the banks to make loans that they consider to be risky. After losing billions in worthless credit default swaps and CDOs backed by worthless mortgages, you wonder how a bank can think that a small business is any more risky than that.
But having been burned by their own stupidity and greed, the banks have now suddenly found religion and don’t want to take any risks anymore. So the business owner is forced to use what ever credit they can find to keep operations running and credit cards, even at their unregulated, criminally high interest rates are a better alternative than closing shop.