In recent years, one of the easiest ways for small businesses to finance their business has been with credit cards. A business owner with a good credit history could get a business credit card with a credit limit of $10,000 to $25,000 (or sometimes more) without the hassles of applying for a bank loan or line of credit. And, if the business owner continued to pay the credit card bills on time, they could count on having credit available when they needed it at a reasonable interest rate.

Now, as reported in BusinessWeek, some business owners are finding that those reasonable interest rates are suddenly skyrocketing to very unreasonable levels. One business cited in the BusinessWeek article, for instance, saw their rates jump from 11.74% to 30.99% after they were late on a couple of payments.

But surprisingly, late payers aren’t the only ones being hit with sky-high interest rate increases these days.

Some business owners with good credit and on-time payments histories are being whacked with exorbitant interest rate increases. A business owner we know just had the interest rate on their credit card hiked from 7.7% to almost 23% even though they were never late on payments, always paid far more than the minimum due each month, and paid off the entire balance about once a year. When the business owner called the bank to ask for an explanation, the bank refused to give any reason for the hike.

While the rate hikes by themselves are disconcerting, the real problem for small businesses with big balances on their cards is that the higher interest rates get applied to existing balances. The result: interest payments can go up hundreds of dollars a month – overnight.

What’s the solution?

For some businesses, unfortunately, there won’t be one. The credit squeeze coming on top of rising gas prices and economic slowdown is likely to cause some businesses to fail.

But if your credit card interest rate gets jacked up 10 or 15 percent, your business is sound and your need for cash is temporary, this may be the time to hit up relatives for money – or borrow from your own personal savings – and pay off the credit card balance completely.

The reason: The interest rates on CDs and money market accounts is quite low. Thus, if you borrow $10,000 from someone who might otherwise put the money in a CD earning 4%, and you paid them 12% interest on the amount you borrow, they’d make several times more income lending you the money than they would putting it in CD. And, your business will pay less interest than it would to the credit card company that’s just raised your interest rate.

To keep all parties – and the IRS – happy, draw up a loan agreement specifying the amount of the loan, the interest rate and the repayment schedule – then, stick to it.

More: 7 Cash Flow Secrets Your Accountant Never Told You

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