Magazine article American Banker

Scotiabank Melds Secured Loan with a Card

Magazine article American Banker

Scotiabank Melds Secured Loan with a Card

Article excerpt

The Bank of Nova Scotia has created a product for small businesses that combines a revolving credit card line and a secured loan. The card, ScotiaLine Visa, allows small businesses to charge up to $50,000 (Canadian) without collateral, and an additional $200,000 (Canadian) as a secured loan. Both types of loans receive the same terms: no annual fee, a 26-day grace period, and an interest rate of prime plus two percentage points (currently 9.5%). The bank, also known as Scotiabank, said it is hoping this product will put it out in front of the budding small-business card market in Canada. "About half of the large financial institutions offer a small-business credit card, but Canada is not as well penetrated as the United States," said Ron Laursen, senior vice president of small business at Scotiabank in Toronto. "Canada has probably been lagging on the small-business lending in terms of making lending products more affordable." However, industry analysts said they know of no U.S. bank that is offering a product similar to Scotiabank's. Most small-business credit cards come with credit lines of up to around $50,000 and a variety of other perks, but few offer an extra secured line of credit with the same lower interest rates attached to the card, and most cards have an annual fee, analysts said. "The ability to charge up to a quarter of a million dollars on a credit card is something that appears to be unprecedented," said Les Dinkin, a principal at NBW Consulting Group in Westport, Conn. "As banks look to create more compelling offers and at the same time try to simplify their product, we'll see them moving in this direction. …

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