From Google, Credit Cards for Small Business

Posted by: John Tozzi on July 22, 2011

This is a guest post by Bloomberg Businessweek reporter Victoria Stilwell.

Google is offering a select number of smaller advertisers a new way to pay for online search ads: a credit card that can only be used to pay for AdWords, the Internet search giant’s keyword advertising program.

Google is teaming up with World Financial Capital Bank to offer a “beta” version of a new AdWords Business MasterCard. The card is being offered to a randomly selected group of U.S.-based advertisers.

The card will allow small and mid-sized businesses to spend on advertising when they need to, such as before a peak selling season, and pay for it when revenue comes in, a Google spokesman says. The card, which carries an 8.99 percent rate and no annual fees, must be used exclusively for Google AdWords purchases. Google says the credit limit will vary by cardholder but declined to be more specific. The company won’t say how many cards it plans to issue.

The interest rate is lower than most other major business credit cards, according to rates posted on BillShrink.com, which aggregates data on credit cards. The most comparable rate is offered by the Wells Fargo Business Platinum Credit Card, which charges 9.24 percent, according to BillShrink.

“If you’re doing AdWords purchases anyway, and if you’re running a balance on your credit cards every month, 8.99 percent is attractive,” says Bill Leake, CEO of the online marketing agency Apogee Results. “The economy’s still soft, and credit is still tight, and fewer alternatives exist for small businesses to get loans.”

Leake says Google already offers direct credit lines to larger clients. The AdWords credit card will allow Google to capture more small- to mid-sized businesses that might be choosing between buying office supplies or online advertising. Offering clients credit cards instead of a direct credit lines helps Google reduce its exposure to advertisers who can’t pay their bills, Leake says.

“If you extend [credit] terms to a business, and the business has problems, they walk away from that and the person who extended the credit is at risk,” Leake says. “Google’s liability is really limited here. Google gets so much of their money from smaller businesses, and this is a great way of cushioning Google if small businesses get whacked from a double-dip recession.”

Reader Comments

Greg

July 22, 2011 6:36 PM

There is little doubt that Google's goal with this low-rate card is to induce AdWords advertisers to spend more, while collecting the associated finance charges will be a welcome additional source of revenue. While there is no denying that an 8.99 percent APR is a very low one, a card with a rewards program will still be a better option for advertisers who pay their balance off at the end of each month. http://blog.unibulmerchantservices.com/google-turns-credit-card-issuer

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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