Small businesses require constant infusions of capital to help them address the personal costs of start-up and overhead as well as providing resources for potential expansion as they grow. While many small business owners choose to finance their day-to-day operations with personal credit cards, a business credit card presents a number of advantages in use for a developing company, offering them the best chance of sustained success.
Higher Credit Limits
The expenses involved with keeping a new business viable in its first months of operation are typically much higher than common personal cards will support for an extended period. Business credit cards have significantly higher credit limits than personal cards, offering businesses access to the capital necessary to keep them running smoothly through what is often a rough start.
Debt is nearly universal among businesses looking to build an initial foothold in a competitive marketplace, and a business credit card can serve as an effective tool for debt management as well. Many low-interest cards will waive balance transfer fees during the introductory period, allowing businesses to consolidate their debt from other cards and spend much less in restitution costs in the long run by minimizing interest accumulation. Learn more about using balance transfers to offset the costs of financing at Business Credit Workshop.
A business credit card typically offers the companies that use them the most possible flexibility in financing their needs. Unlike loans, which only provide access for a fixed sum and require a defined repayment amount each month for the loan to remain in good standing, a dedicated credit card allows businesses to borrow as much capital as needed within their monthly credit limits while requiring only a minimal installment each month to secure more funds as needed.
Rewards points associated with credit card purchases are a common method of promoting these products to those that rely on them, and business credit cards in particular offer rewards tailored to the needs and activities of a small business. Most cards also offer bonus points for a minimal purchase amount during an introductory period, and taking advantage of these offers is an excellent way to maximize the resources available to a growing business.
Business credit cards must always be used prudently, as they can affect the credit score for your business and limit your access to future funding as well as crippling the credit score of the named cardholder. It can also be a good idea to set aside a portion of your monthly budget to ensure timely repayment of the balance accrued. However, a business credit card is an indispensable tool for many new businesses, allowing them to compete with their established counterparts from opening day.