If you were to listen to the political sound bites, you would think that the politicians have done an amazing job protecting the American Consumer through the credit card legislation that was passed in May and goes into effect February 2010. Just like everything in Washington, the sound bites don’t reflect reality. Politicians have done it again. They have opted to protect those who contribute to their campaigns versus passing legislation that protects the American people.

As I have pointed out in past writings, there are a ton of loopholes in this legislation. One of the more disturbing aspects of this bill is the lack of protection for the small business owner. The bill excludes protection for any small business that has credit card debt. I have yet to see a statistic that shows the amount of credit card debt that applies to small business owners. However, I would suspect it is a large percentage.

The National Small Business Association’s latest survey (2008) states that credit cards are now the most common source of financing for America’s small-business owners. The survey showed that 44% of small-business owner identified credit cards as a source of financing that their company had used in the previous 12 months. This was more than any other source of financing.

Business credit was probably one of the easiest forms of credit to obtain prior to the debt bubble bursting. Opening up lines of credit through a credit card in the name of business was very easy. Although the business owner was personally responsible for it just like a personal credit card, the item never was reported to the credit reporting agencies and was never reflected as debt which could lower a credit score. It gave a small-business owner the ability to hide tons of debt within the business without it ever being reflected on their credit score. This enabled small-business owners to obtain large amounts of debt. Of course, the credit card companies aggressively went after small-business owners giving them ample lines of credit through credit cards.

For many credit card companies, this is a big percentage of their business. It is also a big percentage that falls outside the new laws that were designed to protect card holders. Unfortunately, a small-business owner is not considered worthy enough to be protected from the abuse of the credit card industry. Score one for the credit card companies and the politicians that protect them. I wonder what it would be like to actually own a politician?

Tags: American Consumer, bill, Bob Brooks, credit, Credit Card Companies, credit card debt, Debt, Deceptive Money, financing, legislation, National Small Business Association, politicians, Prudent Money, small business owner, Washington