Advanta credit card customers must find other ways to finance their small businesses, starting June 10th. Reacting to mounting losses from credit defaults, company officials decided to close down all of the firm's outstanding credit lines. In a press release, the company indicated that it took the move in advance of a June deadline that would cut off its own capital reserve.
The Philadelphia-based company offered business credit cards to entrepreneurs and to the owners of small companies with limited corporate credit histories. Credit analysts at major brokerages noted that Advanta credit cards remained tied to company owners' personal credit profiles. In contrast, competing corporate credit card issuers can collect business debts more aggressively, minimizing risk.
Like many industry watchers, CardRatings.com founder Curtis Arnold didn't expect such a drastic move. "I was shocked when I heard the news," said Arnold. "This will likely have a signficant ripple effect throughout the entire small business card market as Advanta has historically been a bellwether for the overall market."
Advanta's announcement marks the second major blow to small business credit card holders this month. Last week, JPMorgan Chase closed thousands of credit lines that had originally been opened as Washington Mutual business credit card accounts. Going forward, it is expected that an increasing share of small business owners will rely on personal credit cards to manage company finances.
If you need to replace a current card or are searching for a new card, please consider Business Cards from other issuers featured in our Business Credit Cards section such as American Express.