What to Do if your Business Credit Limit Gets Reduced

Businesses often rely on credit cards to get themselves off the ground. They may also use credit cards to fund growth of the business or to get the business through rough periods when profits are low. Unfortunately, we are in a time when the credit crunch is impacting everyone including small business owners. You may find that a credit card company reduces the limit on your business credit card just when you had made plans to use that money. What should you do if your business credit limit gets reduced?

Here are the steps that you should take if your business credit limit gets reduced:

• Contact the company to see what has caused your business credit limit to be reduced. It may be that you have made some late payments or it could be that your total credit-to-debt ratio was unfavorable. Knowing what the problem is will help you to move forward with a plan for gaining back that credit.

• Ask to speak to someone who can assist you in addressing this problem. You want to ask that your former credit limit be re-instated. The person who answers the customer service call can’t do that for you. You want to work your way up the ladder to speak to the individual who can help you with this even though doing so is a frustrating process.

• Request the credit limit be restored. When you have identified what caused the reduction in your credit limit, you can formulate an argument as to why your credit limit should be restored. When you get the right person on the phone, work on this argument. In many cases, you will be able to get your business credit limit restored to what it was in the past or you will at least be able to get it raised higher than it currently is. For example, if the problem is a debt-to-credit ratio then paying down a chunk of the balance could repair the problem and restore your former credit limit.

• Consider alternative credit options. You may find that you can’t get the credit card company to budget on this issue. If that’s the case, you should look at your other credit card options. Do you have additional business credit cards that you can use? Can you get a higher credit limit on any of those credit cards? Could you open a new business credit card that would free up the credit that you need for the business?

• Consider alternative loan options. The credit economy is tight right now so you may find yourself in a position where it is nearly impossible to get new credit or a higher credit limit on existing cards. In this case, you should consider alternative loan options. Business loans or investment loans from private investors could help you to get through the rough patch until you can increase your business credit limit again.

It is incredibly frustrating when your credit limit gets decreased. It is even more frustrating when this happens as you are trying to grow or maintain a small business. Follow the appropriate steps to try to remedy the problem as quickly as possible.