Providing crucial financial protections for many Americans, including minority businesses

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Last week the U.S. House of Representatives passed the Credit Cardholders’ Bill of Rights - a common sense financial system reform and consumer protection.  This bill provides  tough new protections for consumers facing excessive credit card fees, sky high interest rates and unfair agreements that credit card companies revise at will.

This bill is important to the establishment and growth of minority businesses because a greater proportion of minority-owned firms are started or acquired by using credit cards (10 percent of firms) among other sources of capital, compared to non-minority firms (9 percent of firms), according to MBDA’s “Characteristics of Minority Businesses and Entrepreneurs.” (March 2008)

This finding suggests minority entrepreneurs are more likely to finance long-term liabilities with short-term debt that often carries higher interest rates.

Of all the minority-owned respondent businesses, Native Hawaiian and Other Pacific Islanders and American Indian and Alaska Natives had the largest proportion (13 percent and 12 percent respectively) that used credit cards for the same purpose compared to non-minority firms.

MBDA’s Access to Capital Initiative is focused on increasing the availability of credit and investments in minority businesses.  The current tightened credit market threatens to halt the growth and expansion of minority-owned firms in neighborhoods and communities throughout the United States – impacting both job and wealth creation.