Tips for Choosing an Optimal Credit Card For a New Small Business
Credit is the lifeblood of small business. Tips for choosing an optimal credit card for a new small business that will fit the needs of your specific business model are critical to establishing a credit account to help your business manage its finances.
You have a better chance of favorable rates and terms and of receiving a credit line sufficient for your business use if you apply with a bank where you already do business. If you have a business account at the bank or have previously taken loans to furnish or supply your small business, you may have credit established at that bank even though your file at credit rating agencies may be new and rather thin.
Consider what employees will need to have access to a card for making charges to your business credit account. This may be for employees who buy supplies with the charge added to the main account which you pay monthly.
If you have salespeople in the field, the credit card may be issued for them to use for their personal business expenses such as meals, lodging and rental cars or gasoline purchases. In some cases, these salespeople will be responsible for paying those charges when they receive monthly commissions for their work. Remember, your business is responsible in the end for those charges and for any late fees the employees may be responsible for.
What Kind of Small Business Credit Card Do You Need?
The best credit card for a small business is one that is widely recognized by a major logo such as MasterCard or Visa. The cards are accepted almost everywhere and can be used to cover almost any purchase for your business. Consider the amount of credit you realistically need to use each month for good management of your business finances. That is the amount you will apply for. Remember to include seasonal large purchases that may be part of your business. You want a credit line that is sufficient for your needs.
Exercise Caution For an Optimal Credit Card For a New Small Business
Be skeptical of teaser rates as they are introductory offers and such cards often carry higher than usual interest rates once the introductory period of 6 months or so has expired. If you are confident of your ability to pay the credit card bill in full each month, the interest rate may be of secondary importance. If you may be carrying debt from one month to the next, a high interest rate can be damaging to your business finances.
Transaction fees for pulling cash from a business credit card are very high and this should be avoided. In addition, interest on cash advances often begins immediately and is the highest rate of interest charged on business credit cards. If you are uncertain of your ability to make payments even an optimal small business credit card may not be a wise decision to make.
If your small business is new and you are required to use your personal credit to guarantee an optimal small business credit card, extreme caution is in order. This may be a viable option for you and may help you build up a good credit rating in your business name. The downside is that any failure to pay on the business card will not only hurt the credit rating of your business but will harm your personal credit, too.
Conclusion
Choosing an optimal credit card for a new small business requires planning and thought on the part of the business owner. The goal is to advance your business with credit available when needed. Consideration of how your credit account will be used and how many will have access to it will help you choose an optimal business credit card that will remain useful for years to come.
