In the Federal Reserve's April 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices, a special question indicated that banks continue to be reluctant to lend to small businesses, particularly via credit cards.
According to the Federal Reserve's report, " A majority of respondents indicated that their standards for approving such business credit card accounts are currently tighter than the longer-run average level that prevailed before the crisis."
In other words, getting a small business credit card continues to be difficult for small businesses. Additionally, the Federal Reserve reported that, "significant net fractions of respondents to these special questions indicated that their banks had tightened their terms on business credit card loans to small firms--for both new and existing accounts--over the past six months."
Although small business credit card lending has tightened, small business owners may actually benefit by applying for and using personal credit cards for small business expenses. Small business credit cards are not covered by the CARD Act. Thus, banks can raise rates on existing balances at will, a potentially devastating blow that can lead to interest rates of 29% or higher if a bank deems a small business to be risky.
However, by using a personal card for your small business, you are fully protected by the CARD Act, which means you're rate cannot be increased for existing balances, plus a number of other protections, including fee provisions.
While using a personal credit card may not be ideal for medium sized small businesses, small, owner operated businesses with a limited number of employees may be better off applying for a personal credit card offer. Not only do small business owners stand a better chance of getting approved, but they can also get fairer term and more generous 0% APR deals.