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Issuers still have plenty of room to grow their small-business card portfolios, even during a challenging economy, according to a new report by Mercator Advisory Group LLC. "In spite of the current economic environment, it's still a very attractive segment," Ken Paterson, principal analyst at the Maynard, Mass.-based consultancy, tells CardLine. "Issuers that do a good job managing existing relationships and originating new account relationships during difficult times are going to be in the best position to grow when the economy improves." Card issuers with deeper relationships with small-business owners, through business and personal demand deposit accounts and other types of loans, are best able to cross sell those business owners appropriate business card products, including credit, debit and charge cards, Paterson says. "Small-business credit cards that are originated through those branch-based relationships tend to perform better from a credit standpoint," he says. Many small-business owners try to avoid all types of debt, including revolving credit cards, but issuers could do more to encourage charge card use and to nudge depositors to make better use of the debit cards tied to their business checking accounts, Paterson notes.
