Small business credit cards give business owners access to a revolving line of credit.
According to CreditCards.com, small-business credit cards account for $430 billion in spending, or about 1 in every 6 dollars spent on general-purpose cards. If you haven’t secured a card to use for business expenses, it might be time. Read on to learn more about business credit cards and how they can benefit your small business.
Business cards have a set credit limit and allow you to make purchases and withdraw cash. Like a consumer credit card, a small business credit card carries an interest charge if the balance is not repaid in full each billing cycle. You can get approved for a credit card through a bank or you can compare cards terms and features – and apply online - through websites like Creditcards.com or Credit Karma. Here are six reasons to use a business credit card.
Higher credit limits
Business cards typically carry credit limits of $50,000 or more. This makes it much easier to purchase high dollar goods and services that you need to run your business efficiently.
Boost your credit rating
You can boost your credit rating if you use your cards responsibly and make timely payments. Be sure to do business with suppliers who report your transactions to the credit bureaus as that can help you achieve a high credit score too. For more information, read the SmartBiz blog post What are Business Credit Scores, and Why are They Important?
Separate business credit
A business credit card stands alone. Your personal credit rating is not impacted by your business transactions. For more information on why this is important, review this post from the SmartBiz Blog: Personal Credit Score vs. Business Credit Score: 5 Reasons to Keep Them Separate
Control employee spending
A business credit card makes it easier to track and set limits on employee spending. It also helps you look at the big picture – are your employees helping to grow your business with the money they spend?
Rewards offered for business credit cards might include discounts on business travel and on shopping at business supply outlets. If you’re interested in perks, be sure to compare several cards to find the card with rewards that benefit you and your business most.
Tracking business expenses
Having a business credit card makes sorting out business and personal transactions a breeze when it’s tax time. Also, you’ll get a good handle on your business spending. You might identify areas where you can trim expenses to save money.
Credit cards and credit card debt are a hot topic for every consumer and entrepreneur. We’ve all heard nightmare stories about credit card misuse and how it can sink personal and business finances. However, the benefits of using a business credit card for your small business far outweigh the negatives if you use it correctly.
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