Advanta, which has issued credit cards to nearly 1 million small businesses, announced it will shut down all customer accounts to new activity on June 10 because of growing losses and uncollectible debt. As Advanta's stock sank 30% Tuesday, analysts expressed doubt the company could survive. Nilson Report publisher David Robertson said Advanta's plan to offer investors 65 to 75 cents on the dollar was a "Hail Mary."
Based on some of the comments posted online by their customers, this is not a big surprise.
Advanta started out as a lender to teachers in 1951 and by 2001 was concentrating solely on credit cards to small businesses. It became the largest card issuer focused on small-business customers.
But...I have heard a lot of horror stories about these guys. A quick search online for complaints indicates a penchant for raising rates to over 30% which as you might imagine has elicited a lot of comment online.
Credit cards are an important source of funding to small enterprises and small companies have been hit particularly hard during the credit crunch. Earlier this year, American Express shut down its small business credit card group area which included a small business line of credit product.
Getting reputable credit flowing to small businesses will go a long way in sustaining a recovery in the economy.