I sent an e-mail detailing the dire predictions for small business credit made by Meredith Whitney last month. She said there would be a bunch of bankruptcies and failings among small business credit card issuers and ancillary banks. Sure enough, on the heels of CIT came Advanta, a small business credit card issuer. In all fairness, I was a client of Advanta, much to my satisfaction, during the time my partners and I owned our clothing company. While their interest rates were usurious, at least we could use them as a payroll float. Now, they are gone.
Advanta stopped lending in June, and sunk further into debt as losses mounted. They are attached to Advanta Bank, whose capital reserves have fallen below Federal guidelines, and is likely to be shut down by the FDIC any day now.
To coin a phrase used by Ed Schultz - folks, this spells trouble for Main St. Small business is the literal backbone and hope for economic recovery in America. Another nail went into its coffin today.
Tags: Advanta, Ed Schultz, Meredith Whitney, MSNBC