Fed report highlights upsides and downsides of CARD Act

While some provisions of the recently passed CARD Act could damage the prospects of small businesses trying to acquire valuable lines of credit in the down economy, other parts of the wide-ranging new law should have a positive effect on transparency and education in lending, according to a report from the Federal Reserve.

The report says that “applying many of [the Truth in Lending Act’s] substantive credit card protections to small business credit cards would protect small businesses from practices that the Congress and the Board have found to be harmful in the context of consumer credit cards.”

However, the Fed also asserted that some of the new restrictions would make credit management more difficult for small businesses by limiting the amount of credit to which they have access at any given time.

Experts say that both consumers and businesses are likely to be affected as the numerous clauses in the CARD Act take effect over the course of the next several years. All provisions of the bill will have been enacted by 2014.