Using Business Credit Cards as an Essential Tools for your Small Business

Every credit cards made especially for every type of business. Business Credit Cards had been proven as an essential tool for a small business. What are the advantages you can get? Let's find out how.

For small business owners and home based entrepreneurs, the benefits of using business credit cards are too many to be neglected. Consider the following advantages as to why business credit cards are essential tools for every small business.

Manage business expenses more easily. Having a business credit card enables you to separate your personal and business spending. Business credit card issuers also send monthly billing statements as well as quarterly and yearly summaries. Thus, you can easily keep track of where your business funds are spent and use control where it’s needed. These features are especially indispensable as the company begins to expand and expenses start to grow.

Free up your cash flow. It is crucial for a business to have a solid financial resource at all times. A business credit card comes in handy especially when emergency expenses arise. For example, let’s say that you received a large order from a customer at an unexpected time. Even if you don’t have the cash, you can charge to your credit card all purchases that are necessary to deliver the order on time.

Distribute your funds easily. Business credit cards also provide a more convenient way of distributing funds to your employees with the use of supplementary cards or extension cards. If cash is needed in a hurry, there’s no need to go through the long process of requesting for petty cash and wait for approval. Instead, an employee can charge the expense to his extension credit card that is linked to your account. To ensure that the funds are used strictly for business purposes, every purchase is reflected in your monthly billing statement so you can keep track of your employee’s spending.

Manage your account online. Most business credit cards come with an online banking feature which gives the business credit card holder the option to access his account through the internet. This way, you can check your account and send payments at any time straight from your own computer. Any entrepreneur can surely appreciate this convenience.

Get rewarded from your expenses. Many credit cards for small businesses come with rewards. Reward programs vary from travel rewards, gas rebates, and cash backs so you can choose the exact type of program that best fits your business. Enrolling with the right kind of business reward credit card can bring you huge savings and incentives from your spending.

Build your business credit. After registering with a business credit bureau, the only way to build a separate credit history for your company is to acquire new accounts. To build your business credit history, you can choose to apply for a business loan or a business credit card. Once you’re approved for a business credit card, pay attention to how you use your credit limit and how timely you are in submitting your payments. Remember, if you want to enjoy an excellent business credit, you must never exceed your credit limit and you should always pay off your credit card charges on time.

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The Battle between Secured vs Unsecured Business Credit Cards

Having a poor personal credit can be a major disadvantage when trying to start a business. Since you can’t qualify for business credit cards that require good or excellent credit, you are left with two options. You can either apply for a secured business credit card or look for an unsecured business credit card that accepts average credit. Needless to say, both of these options involve higher costs than business credit cards that are reserved for people with good credit.

Still this doesn’t mean you can’t find a reasonable deal. If you do careful research, you should be able to find a credit card company that offers bad credit credit cards for small businesses with reasonable fees and terms. Now, which is a better option for you- a secured business credit card or an unsecured business credit card? The answer of course, may depend on your situation.

The Difference Between a Secured and an Unsecured Credit Card

A secured credit card basically requires a security deposit in your account. This fund will be used only if you failed to keep up with your credit card payments. This way, your credit card company is assured that in case you default from your debts, they can simply tap into your account and use the money to pay your unpaid charges. For this reason, the value of your security deposit would also determine your credit limit. Obviously, the higher the amount of your deposit is, the higher your credit limit would be.

In this case, submitting a smaller security deposit in your account can put a limit on your credit card use. If you need to make large purchases, you may not be able to do so because of a low credit limit. On the other hand, this drawback can also be an advantage since it can protect your business from the risk of extremely large debts.

On the other hand, an unsecured credit card does not require any security deposit. However, because of the greater risk involved, credit card companies charge higher interest rates and penalty charges on these business credit cards. Still, some business owners prefer this type of account because it gives them more flexibility with the use of their credit.

Which One Is Best For My Business?

Clearly, bad credit business credit cards have their pros and cons. Making the right choice would depend on the financial needs and spending style of your business. Whichever you choose however, the important thing to remember is your obligation to pay. Bear in mind that failing to keep up with your payments would only bring more damage to your credit history.

On the contrary, the wise use of your business credit card and the timely submission of your payment are the key to improving your poor credit. Lastly, don’t forget to check if your preferred business credit card reports your payments to the credit bureaus since it is the only way to repair bad credit. After a few months or a year of consistent payments, ask your credit card issuer to upgrade your account to a standard business credit card that doesn’t require a security deposit and with lower rates and charges.


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Reasons Why Companies Should Have Business Credit Cards

Despite the growing popularity of business credit cards, many small business entrepreneurs are still skeptical about them. In fact, most homebased business entrepreneurs prefer to use their personal credit cards for their business expenses as well.

Why are business owners hesitant to get business credit cards? For one, some entrepreneurs think that the application process is complicated while others think that only large business qualify for a business credit card. Others are scared that having a business credit card can lead to overspending and there are some who generally equate credit cards with high rates and fees. There are also some who are hindered by the status of their credit. If you own a business and you feel the same way, perhaps this article can help you realize the benefits of having a small business credit card.

Truth about Business Credit Cards

First of, let’s get these false notions out of the way. Is it really complicated to apply for a business credit card? Not all. In fact, applications can be submitted online and getting approved is just as easy especially for those with excellent credit. But what if you have poor credit? Secured business credit cards grant approval for business owners with less than perfect credit scores.

Do all business credit cards charge high interest rate and fees? Different credit card companies impose different rates and charges but if you look closely, you’ll surely find a business credit card that offers low interest rates and reasonable fees as well. Those with excellent credit can take advantage of the best deal offers by business credit card companies who are more than happy to have them as clients.

Benefits for the Small Business Owners

Why is it worth it to get a small business credit card? Primarily, a business credit card helps you establish a separate credit history for your company. As you establish a strong foundation for your business, building an excellent business credit will help you in your future business endeavors. For instance, if you want to expand your company, applying for a bank loan will be a lot easier with an excellent credit to back you up.

Additionally, a business credit card makes your accounting and bookkeeping tasks so much less complicated. Since all your business purchases will be reflected in your statement of account, you don’t have to worry about missing a single item in your inventory. This obviously comes in handy when it’s time to pay your business taxes.

Keeping track of your business expenses is also made easy by distributing supplementary business credit cards to your staff. Each month, all purchases they charged on their card will be included in your billing statement so you can be sure that your business funding is well-spent. Other benefits include earning incentives from your business credit card use as these credit cards often come with reward programs especially designed for businesses.


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