From Google, Credit Cards for Small Business

This is a guest post by Bloomberg Businessweek reporter Victoria Stilwell.
Google is offering a select number of smaller advertisers a new way to pay for online search ads: a credit card that can only be used to pay for AdWords, the Internet search giant's keyword advertising program.
Google is teaming up with World Financial Capital Bank to offer a "beta" version of a new AdWords Business MasterCard. The card is being offered to a randomly selected group of U.S.-based advertisers.
The card will allow small and mid-sized businesses to spend on advertising when they need to, such as before a peak selling season, and pay for it when revenue comes in, a Google spokesman says. The card, which carries an 8.99 percent rate and no annual fees, must be used exclusively for Google AdWords purchases. Google says the credit limit will vary by cardholder but declined to be more specific. The company won't say how many cards it plans to issue.
The interest rate is lower than most other major business credit cards, according to rates posted on BillShrink.com, which aggregates data on credit cards. The most comparable rate is offered by the Wells Fargo Business Platinum Credit Card, which charges 9.24 percent, according to BillShrink.
"If you're doing AdWords purchases anyway, and if you're running a balance on your credit cards every month, 8.99 percent is attractive," says Bill Leake, CEO of the online marketing agency Apogee Results. "The economy's still soft, and credit is still tight, and fewer alternatives exist for small businesses to get loans."
Leake says Google already offers direct credit lines to larger clients. The AdWords credit card will allow Google to capture more small- to mid-sized businesses that might be choosing between buying office supplies or online advertising. Offering clients credit cards instead of a direct credit lines helps Google reduce its exposure to advertisers who can't pay their bills, Leake says.
"If you extend [credit] terms to a business, and the business has problems, they walk away from that and the person who extended the credit is at risk," Leake says. "Google's liability is really limited here. Google gets so much of their money from smaller businesses, and this is a great way of cushioning Google if small businesses get whacked from a double-dip recession."
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Senators Seek More Disclosure For Business Credit Cards

Four Senators today called for more disclosure on business credit card offers so cardholders will understand that business cards are not protected by the same laws as regular consumer cards that bar practices like retroactive interest rate hikes.
In a letter today to Fed Chairman Ben Bernanke, the four Democrats asked the Fed to "take immediate steps to protect consumers" from mistakenly believing that the more than 10 million business credit card offers that go to households each month have similar contracts as other cards. The Senators are Charles Schumer of New York, Jack Reed of Rhode Island, Bill Nelson of Florida, and Robert Menendez of New Jersey.
In addition to seeking more disclosure, the Senators ask the Fed to make business credit card issuers require business tax ID numbers from applicants to prevent non-business owners from getting the cards. Fed spokeswoman Susan Stawick declined to comment on the letter.
The Pew Safe Credit Cards Project highlighted the separate treatment of small business credit cards in a report last month. It's not a new issue, however. As far back as 2008, the Fed made rules for consumer credit cards that did not apply to business cards, even though such cards are personally guaranteed and function similarly to personal cards. When Congress passed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act in 2009, small business cards were carved out of that as well. Business card users still got hit with penalties, such as "overlimit" fees they never opted into, that consumer cardholders were protected from.
Business-to-business transactions aren't generally covered by consumer protection laws because business owners are assumed to be sophisticated enough to do their due diligence before entering into an agreement. The Senators' letter, citing data from Pew, questions how many business card offers reach people who don't own businesses. In the last five years, they write, "Americans received over 2.6 billion business credit solicitations, comprising over 9 percent of all direct mail marketing of credit cards to U.S. households. Alarmingly, more than 6.7 million of these solicitations go to seniors every month."
Full text of the letter after the jump.
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