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ICBA Calls Credit Cards Critical to Meeting Financing Needs of Entrepreneurs

Washington, D.C. (April 3, 2008)—While stressing the importance of credit cards as a key financing tool for entrepreneurs and small businesses, the Independent Community Bankers of America (ICBA) urged Congress to act with caution on any legislative proposals that would increase the regulatory burden on community banks and affect their ability to serve their business customers.

"Small business is one of the key drivers for this country's economy and many entrepreneurs rely on credit cards to get their businesses up and running," said William Rosacker, ICBA secretary and president of United Bankers' Bank, Bloomington, Minn., at a House Small Business Committee hearing on The Role of Credit Cards in Small Business Financing. "A community banker's ability to offer small business credit cards at competitive rates and terms to entrepreneurs in our local towns is critical to supporting the engine of small business that drives our economy."

Community banks provide nearly a third (32.7%) of the total dollar amount of bank business loans under $100,000 and many are small business credit card products. These products also offer key advantages to entrepreneurs. For instance, when a small business has no track record, access to funding through a credit card can be the key resource that helps get the business going.

"In today's economic environment, every source of capital needs to be an option for small businesses and entrepreneurs, and adding further regulatory costs will make it increasingly difficult for community bankers to remain a viable choice to meet the needs of small businesses in search of credit card products," Rosacker said.

"Community bankers are well-positioned to meet the start-up and on-going financing needs of small businesses, be it through traditional loans or highly competitive business credit card offerings," Rosacker said. "Local businesses are not always better served by a financial institution just because of its tremendous size. The support structure built on local decision-making and long-term relationships unique to the community bank business model is a proven formula to help entrepreneurs succeed."

Read ICBA's full testimony at www.icba.org.