These days, credit card companies are offering many more options for the small-business owner. In fact, this area of the industry is growing rapidly as it remains relatively new. Indeed, as the market becomes increasingly competitive, credit card companies have embraced the small business as the next big thing. As a result, business owners now have a lot more to consider when it comes to business credit cards and how best to use them.
For the small-business owner, there really isn’t a downside to having a few business credit cards on the books. In fact, if used responsibly, business credit cards can be just the solution to keep your new business going without affecting all-important cash flow.
Earn Rewards Too
Buy equipment and business supplies with your card and earn points in return. Much like a consumer credit card, a business card can also carry with it rewards, such as cash back, travel savings, or points for merchandise.
However, also like a consumer card, business owners need to use their credit wisely so as to positively build business credit, get full rewards, and not be undone by finance charges on late payments or balances. Bottom line: exercise sound judgment when using business cards and see your business grow.
With business credit cards, you’re given the purchasing power to spend when you need to. From office supplies to software, materials to products, it’s often impossible to wait for cash to come in. As a small business, you can’t risk having production lag or worse still, stop. It’s about handling the present, while being prepared for the future. Business credit cards and their high credit limits can afford this peace of mind.
Most business credit cards have a credit limit of $50,000 or more. As far as applying for one, a good credit score helps but in general, it’s easier to secure a business card than lines of credit. The advantages of having one (or a few) are good for any size business, but especially the small/new enterprise. Through responsible use, you can:
- Earn rewards that’ll benefit your business
- Improve your business credit rating. Note: check to see that merchants report your credit activity to the business credit bureaus (instead of to consumer credit)
- Gain credibility with potential clients/partners
In addition, business credit cards will also give you more control over employee spending, as well as separate spending reports for accounting. Instead of placing purchases on your personal credit card, allow these purchases to build and demonstrate positive growth for your business. This will help with future financing and client relations. You’ll be building a reputation as a business that lenders and customers can trust.
Be Organized
As for how many business credit cards you should have: Again, similar to personal credit cards, it’s OK to have more than one. A combination of offers can help you obtain the buying leverage you need. You may consider having one set aside for business travel, another for supplies, and another for payroll.
Do not to overspend and if you do take advantage of grace periods, make sure that you (and your small business) commit to paying within that time. If the balance carries over to the next billing cycle, the late fees could be what cancel out any benefit(s) gained from your credit purchase, as well as harm your business credit rating - a rating just as important as one’s personal credit score.
Ready to get a business credit card? Remember, the major credit card companies are all competing for your business. Compare business credit cards from Visa, MasterCard, and American Express and see which one makes the best pitch. Research carefully, as you would a personal card. Look at interest rates, APR, grace periods, and associated rewards programs.
Which card deserves your business?
