Google Tests AdWords Credit Card For SMBs

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While some smaller companies continue to struggle with tight credit, they're about to get a new willing lender: Google. The search Goliath is offering a credit card--intended primarily for SMBs--specifically for AdWords purchases.

"We are beta testing the AdWords Business credit card with a small group of our U.S.-based advertisers," a Google spokeperson said via email. "AdWords is a tremendous driver of growth for small businesses, so we think it makes sense to give them a more attractive way to pay for AdWords."

The spokesperson declined to offer additional details, but Google executives told Reuters the card will offer varying credit lines at an 8.99% interest rate, and that it can't be used to purchase anything other than search campaigns.

AdWords already accepts plastic--as with its major rivals for SMB budgets, a credit card is really the only thing an advertiser needs to kick off a self-service campaign. The difference here, of course, is that Google itself is getting into the lending business. The fact that the AdWords card can't be used for anything but ad buys makes it something of a 21st-century version of the age-old department store card.

Why would a small business use the AdWords card and not their regular card? Laurie McCabe, partner at The SMB Group, doesn't see much value for occasional advertisers or those with minimal search budgets. But McCabe sees two potential benefits for heavy-spending SMBs to have Google in their wallets: Rewards for AdWords loyalty and competitive credit terms.

"If I have an ability to rack up points and then get discounts as I purchase more AdWords, that would be a reason to get it," McCabe said in an interview. "If they have a low interest rate, then it makes sense."

In essence, becoming a small business lender makes Google a competitor to--albeit a tangential one--big banks and other credit card issuers. The 8.99% could indeed offer borrowers a break on interest: This week's average APR on business cards was 12.91%, according to CreditCards.com, and the national average across all card types was nearly two points higher.

"The only other thing that would factor into my decision: What perks am I getting on my other cards? Are they better?" McCabe said.

Competition for Google's core business--search--had seemingly stepped out of the recent spotlight. Amid the Google+ buzz, the Facebook-Skype integration, and news that Microsoft might be developing its own social network, it might be easy to forget that advertising still pays the bills.

The AdWords credit card is another indicator of Google's focus on SMBs as it looks for ways to keep revenue rising. Yet another: The company just kicked off Texas Get Your Business Online, a program offering free websites to local businesses. Part of the package for signing up? A $75 dollar AdWords credit; the business has to enter billing information to claim it. The site says just over half of Texas businesses don't have a website. Though McCabe puts the nationwide number of SMBs without websites more in the 30% to 40% range, she sees the logic in Google's strategy.

"Well, let's get those people up and going, too, because once they get the websites they're going to be buying AdWords at some point," McCabe said. "It's all part of making the revenue pipeline bigger and bigger."

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