June 18, 2004 -- When it comes to credit lines and charge cards, small business owners are finding that there is no shortage of lenders knocking at their doors. And, according to reports, the smaller the size of the business, the more desirable it might be to those doling out the credit.

Among them, MasterCard and NetBank this week launched campaigns targeted at this market. The latest iteration of MasterCard's "Priceless" advertising campaign will target small business owners in ads centered around the theme of "What it Takes" to be a small business owner. The new campaign is part of MasterCard's ongoing Working for Small Business program.

NetBank also is making a bigger push for the small business market with two new business credit cards that offer credit lines up to $100,000.

The moves come at a time when American Express, traditionally the leader in this sector, is losing market share. According to a study by Informa Research Services, almost half of all small businesses that rang up a charge in 2002 used an American Express card to do it. But by 2003, only 31 percent of small businesses were using American Express as their primary charge card, said Informa analyst Mike Marselli, who studied the borrowing habits of 2,800 micro-, small- and mid-sized companies.

"With their lower fee structure and aggressive marketing campaigns, Visa and MasterCard have clearly found success in recent years," said Marselli, who noted that Visa and MasterCard now account for 48 and 26 percent of the small business market respectively. "But credit cards have become a commodity. Most businesses have more than one card, which makes it easy to shift your loyalty."

In response, American Express has begun aggressively pursuing micro-sized businesses - those earning less than $1 million in annual revenue. Since 98 percent of all companies in the U.S. have fewer than 99 employees, American Express's strategy is about volume, said Penny Gillespie, a senior analyst with Forrester Research.

"It's all about looking at a revenue model based on smaller percentages, but more transactions to make up for it," said Gillespie. "Also, there's the overriding assumption that these small companies would someday grow up to be big companies."

Analysts remain unclear which lender will win the race for small-business market share.

"The next stage will be whether Visa and MasterCard can develop the same kind of brand effort that can compete with what American Express is doing," said Marselli. "Does the micro-business owner identify with them the same way they do with American Express?"