Is A Small Business Credit Card Right For You?

A small business owner needs to have a good credit history. And one of the relatively easiest ways to do that is with a small business credit card.

A business credit card is designed with the needs of the business owner in mind. They usually come with a higher credit limit, lower interest rates, and the occasional additional benefit and perk. One of the chief ways they differ from a consumer credit card is the deatiled reports of purchasing and interest activity they generate.

Even if your new business just opened its doors, you’ll find that a small flood of small business credit card applications show up in the mail. You can also find applications on the Internet or through your local bank. These last two methods generally get faster results.

When applying for a small business credit card, you will need to provide proof of a business license. Along with this, you may also need to verify your good credit standing, especially when your business is a sole proprietorship. You will also probably need documentation such as your most recent tax return or your latest billing statements.

In deciding on choosing a small business credit card, here are some points of advice:

Don’t get carried away. A line of credit in a small business person’s hands feels like cash burning a hole in their pocket, but remember that it’s actually a debt waiting to be taken on. Just like for your personal credit cards, use a business credit card only in times of need. You might be tempted to max it out buying up assets to launch a new product or service, but that’s more gambling than it is good business sense.

Look for good payment flexibility. If your previous balance on the card is paid off in full, you should be able to get a grace period of between 20 and 25 days before a new purchase begins to accumulate interest.

Bargain for a lower interest rate. This is self-explanatory. Small businesses enjoy a buyer’s market; credit companies just adore your business because you’re a much lower risk than a bottom-line consumer. Use that position to your advantage.

Look for extra benefits that go well with your needs. If your business requires you to travel a lot, frequent flyer miles will come in handy. A card with a gas bonus will help alleviate your transportation costs, if your business calls for a fleet of delivery vans.

Keeping and maintaining a business credit card is a good way to build up a positive credit history, but it’s only an intermediate step. Keep it handy just to use for times when you could use a little flexibility in funding.