Are credit cards for small business good?

Many credit card issuers now offer an array of small business credit cards. However many commercial lending institutions, including credit card companies, are reluctant to give business credit cards to startup businesses.

What are the advantages to small business credit cards?

Credit cards for small businesses have several advantages.

• The first and most obvious reason for obtaining credit cards for small business is cash flow. In many businesses it is necessary to purchase supplies or goods prior to selling. It may be difficult for a small business owner to arrange the funds needed at the beginning of the month if they will not receive payment for them later in the month. For instance, a contractor needs to buy construction materials before he can begin a project he must obtain full payment for it. A small business credit card will come in handy in these types of situations.
• Another important advantage of business credit cards are the gracious credit limits. Many business credit cards offer high credit limits, while others may not even set a limit. This is beneficial for businesses which operate like the contracting business. If your business would carry a balance from month to month, a small business credit card with a high credit limit and low interest rate would be a good option.
• Some business credit cards have no spending limit and allow businesses that have unpredictable inventory expenses flexibility. These cards usually carry an annual fee.
• There are new business credit cards that offer rewards programs. These cards, like the Advanta Platinum with Rewards business credit card, offer a low fixed interest rate and cash back rebates on everyday purchases. These business credit cards also offer high credit limits and usually do not have an annual fee. Businesses that require employees to travel extensively can benefit from having a business credit card which offers rewards or discounts for frequent travel on certain airlines or stays at specific hotels.
• Many businesses use business credit cards to track business expenses. Using one credit card to pay all applicable expenses can significantly reduce the burden. Several business credit card companies offer electronic statements that categorize expenditures. These statements can often be downloaded into accounting software programs. This feature is also a highly efficient way to organize and track employee business spending. Each employee's expenditures are separated, organized and available for download without the hassle of multiple statements and numerous receipts.

What factors should I consider before I apply for a small business credit card?

There are a number of considerations to be made prior to applying for a business credit card.

• The most important is your company's credit rating. Many business creditors will examine your personal credit report. Many creditors believe that your personal credit habits will be reflected in your business. This is especially important if your business is in the development or start up stage. If your business has good credit histories, numerous options will be available. Your options become limited if your credit history is poor.

• Will you be paying the balance in full each month?

  • If your balance will be paid in full each month, you may want to examine business credit cards that offer rewards or cash back bonuses. A low interest rate is irrelevant because you do not carry a balance and will not incur charges. Look for cards that offer no annual fees. For example, the CitiBusiness Card would be a good choice.
  • If you will be carrying a balance from month to month, a low interest credit card is very important. Minimizing interest and fees means increased profits for your business. Try to select a card that offers the lowest interest and no annual fees such as the Discover Business Card.

• How will you be using the card?

  • If you have predictable expenses a credit card with a preset limit will be beneficial.
  • If your expenses are unpredictable or undergo drastic changes from time to time, a credit card with no preset limit may prove more beneficial. A great business card with no preset limit is the American Express Business Gold Rewards Card. These accounts give you flexibility when your business expenses ebb and flow. They usually have an annual fee.

• Will the card be used for specific expenses?

  • Several cards, like the Continental Airlines Business MasterCard from Chase, allow business to earn airline frequent flyer miles with every purchase.
  • Certain business credit cards offer bonus rewards for purchases made at specific stores, or purchases of a specific product.

It is certainly worth to invest time and effort to find the best credit card for your small business. When used properly, small business credit cards are an invaluable asset for most businesses. They have helped lots of people.

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