Small Business: Defaults Doubled !!

July 20 (Bloomberg) -- Advanta Corp., the credit-card company that cut off almost 1 million small-business accounts after posting three quarterly losses, said the default rate more than doubled in June from May to 56.95 percent.

Advanta started writing off loans after they were delinquent 120 days, the Spring House, Pennsylvania-based lender said today in a federal filing for its Advanta Business Card Master Trust Advanta Series. Loans previously were deemed uncollectible after 180 days, the industry standard.

The policy “was changed as a result of closing customer accounts to future use,” the filing said.

Advanta’s charge-off rate dwarfs the national average, which set a record in June when it topped 10.4 percent, according to Fitch Ratings. Bank of America Corp. on July 15 posted the highest June write-offs among the nation’s biggest lenders at 13.86 percent, a rate that includes consumer credit cards.

Delinquencies for Advanta loans 30 to 119 days past due rose to 8.12 percent in June, compared with 7.07 percent in May, and “early stage” delinquencies for accounts 30 to 59 days late increased to 3.64 percent, from 2.71 percent, the filing said. Full Story