Small-business cardholders are not included in the protection that shall be provided in the Credit Card Reform Act, which was signed into a law by President, Barack Obama, last May.
When House of Representatives passed a bill that would move the date of implementation of this Credit Card Reform Act of 2009 from February 2010 to December 1 this year, Representative Neil Abercrombie, a Democrat from Hawaii, has outlined an amendment that would include small-business companies in the definition of credit card "consumer" in the Truth in Lending Act.
In this said amendment, Abercrombie proposed those firms with 50 employees or less should be extended the same protection as ordinary consumers may enjoy upon implementation of this law.
Banks and financial lending companies will not have freedom to raise interest rates and charge fees on business credit accounts; they shall be given 45 days notice before doing the same and transactions limit will increase to $50,000 from $25,000. These are some privileges and protections that Abercrombie is pursuing in drafting an amendment.
The National Small Business Association (NSBA) reported recently that almost 60 percent of its members are using credit cards to fund their businesses. These small firms are paying 20 percent in interest.
The NSBA and other small business advocate groups had lobbied the proposal twice; first when the credit reform act was being deliberated in the House and second when legislators were considering the bill that will expedite implementation of the law. They were not successful in convincing Congress to include small-business groups as credit card "consumers."
After two failures, Abercrombie has filed his proposal as an independent bill. House Committee on Financial Services Chairman Representative, Barney Frank, has promised lobbyists that they will conduct hearings on Abercrombie measure.
However, the earliest schedule that this proposal could get would not be until the first quarter of next year, after the committee finishes with the regulatory reform.
However, New York Democrat Representative, Nydia Velazquez, Chairwoman of the House Small Business Committee, did not show any enthusiasm on Abercrombie measure.
Even Republicans on the Senate Finance Committee shared the same sentiments as Velazquez's, saying that consumers and businesses are different from one another.
They said there are different standards, requirements, rules for business borrowers. Small business companies and consumers are both borrowers and the former do not automatically include in protections provided in the new credit law.
Republican legislators, on the other hand, suggested that small business advocates should consider seeking law that will restrict credit providers for small companies.
