Banks may be missing an opportunity to provide financing to the fast- growing small-office/home-office market, according to a study by PSI Global.

More than half of the 6.2 million so-called SOHO businesses pay for expenses with personal credit cards, the Tampa-based research firm found in a recent study.

And 70% of these entrepreneurs use a credit card from an issuer other than their primary bank.

This category of companies with 20 employees or less has historically relied on bank loans. Now more and more are avoiding the sometimes lengthy loan-approval process and opting to take advantage of the low-rate, easy- credit offers that card issuers mail to homes by the millions.

Other business owners are looking for ways to supplement their loan availability or are in need of convenient payment methods for shopping on- line or by telephone.

PSI Global said that in the past 12 months, 28% of SOHO outfits used personal credit cards for business financing, 62% used the cards for business travel, and 71% used them to buy office supplies and equipment.

"Providers that fail to offer a no-fee, low-interest rate card to SOHOs will lose credit card business and risk the opportunity to offer more lucrative credit-line products to these companies," said Maria Erickson, senior vice president at PSI Global.

Ms. Erickson said banks have failed to offer commercial cards with special rates and features targeted for the SOHO market.

These customers "are not interested in the typical commercial card features that appeal to larger companies, nor will they pay for them," she said. "If SOHOs could get attractive pricing on a commercial card, they would be perhaps enticed to switch."

Of those polled by PSI Global, 76% do not think they should have to pay an annual fee, and 65% of those using their personal cards for business said an interest rate over 12% was too high.

The credit card associations are waking up to what is now the fastest- growing segment of the small-business market, and are looking for ways to help their member banks appeal to SOHO prospects.

Visa U.S.A. is sponsoring a SOHO Summit in May, where Fortune 500 companies will address different ways to reach the SOHO market. Visa is looking to develop and promote ways that SOHOs can get discounts and benefits similar to those available to larger companies because of their scale.

"We are now looking at the small-business market and seeing many different ways to further segment this market," said Bruno Perreault, Visa U.S.A.'s senior vice president of commercial cards.

MasterCard International is creating an Internet link from its home page to a virtual mall for SOHO businesses, where they can buy discounted office supplies and other related products.

MasterCard said the Internet will be its main marketing vehicle for the SOHO market.

"So many SOHO businesses have Internet sites, so it will be relatively easy to find them," said Steve L. Abrams, senior vice president of U.S. corporate products at MasterCard in Purchase, N.Y.

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