Small-business credit card firm Advanta to cease lending
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Some small businesses will see another source of credit dry up soon: Advanta Corp., one of the biggest credit card providers to the small-business market via Advanta Bank, announced late Monday that it would shut down all accounts to future use on June 10.
From Bloomberg News:
Advanta will cease lending after uncollectible debt reached 20% as of March 31, according to a statement and filings by the Spring House, Pa.-based firm. Defaults on cards historically track the jobless rate, and analysts have been concerned that the industry’s average for bad loans would breach 10% and set a record. Advanta decided to cut off customers after defaults rose to twice that threshold, from 9.6% at year-end. The recession affected Advanta’s customers across the country, Chief Financial Officer Philip Browne has said. ‘We’ll be shutting down accounts for future transaction activities, but many of the customers will maintain balances and pay us off over time,’ Browne said in an interview. ‘We’ll have to service and collect on that, and that will be the first order of business for the company.’
Advanta’s Class B shares were down 45 cents, or 29%, to $1.10 at about 10:30 a.m PDT today. The stock has collapsed from about $9.50 in mid-September.
-- Tom Petruno