Business owners operating ventures of any size can benefit from having a business credit card account. Shortly after the business is operating, it’s a good idea to apply for this form of credit. Having a business credit card can help company owners and operators keep track of expenses and gives them a cushion to ride out cash flow issues that will arise from time to time.
Higher Credit Limits
Many lenders are willing to give a business owner a higher credit limit than it would consider offering to an individual applicant. The business credit card account may come with a limit of $50,000 or more, which means that buying equipment or other purchases is much easier than if the owner had to come up with the cash to do so. They can go ahead and make decisions that will help them keep the business going with confidence.
Establishing Credit in the Business Name
Rather than using his or her personal business cards to finance business expenses, having a separate business credit card makes more sense. The business establishes its own credit that is considered as if it is a separate entity. As the business owner pays the business credit card bills on time and doesn’t abuse the privilege, the credit rating for the business goes up.
When a lender is considering a loan application, it will consider the credit rating and payment history for the business. If the owner has had some issues with not making payments on time in the past, that may not affect his or her ability to get credit for the business.
Boost to Credit Rating
As the business establishes a good history of making payments on time, its credit rating will go up. Over time, the business owner will be able to access a higher amount of credit, which will allow it to expand. A good credit rating will also open the door to other types of credit for the business, including a line of credit.
New business owners should consider applying for a business credit card first. This step will help them track expenses more easily while they are still in start-up mode. Once they reach the stage where they are ready to hire employees, issuing business credit cards to key players will continue to help with record keeping and help to keep spending by employees under control.
Just like in the case of looking for a personal credit card, considering multiple options is the key to getting the right card. There are a number of companies who regularly issue credit cards to business customers. Being a startup or a small business need not be a barrier to getting much-needed credit.
Business Credit Card Application Tips
Rather than apply for several cards at once to find a company that will issue credit to a business owner, a better approach is to look at a number of options first and then apply for a card. Having several inquiries on the credit report in a short time will bring the number down. Likewise, having several business credit card accounts open at once will also mean a lower credit rating.
Comparing Annual Percentage Rates (APR) is another thing that business owners need to do before choosing a business credit card. Rates will vary, depending on the credit card issuer. To get the best possible interest rate on the business credit card, the business owner should take steps to make sure they are as credit-worthy as possible. Doing business with suppliers who will share a good payment record to the credit reporting agencies is a way to show a business credit card issuer that the business is a good risk.
Asking about the grace period is another good strategy. Many card issuers will offer 21 interest-free days on new purchases. The company can take advantage of this fact to enjoy the cash flow that this offer. Going over the 21-day mark, though, means having to pay interest and perhaps a late payment penalty.
Business owners who are looking for a business credit card should look at the fine print carefully before applying for this type of credit. The credit card company may charge an annual fee just to keep the account open. Paying the balance off in full each month won’t change this fact.
Finding the Best Business Credit Card
To check out all the advantages of having a business credit card, compare the various options available by using our free credit card chaser tool. Just visit our home page and you can get started finding the best credit card today!
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