December 21, 2016
Before You Swipe: What You Need to Know About Business Credit Cards
A business could either be a locally run start-up, or a large company with scores of employees. Either way, any type of business can utilize business credit in some fashion. These cards are a great source of additional capital and are easy to integrate into business transactions. There are different features for every business credit card out there. It’s a huge billion-dollar industry. There are some things you should know before getting a business card.
Determining Factors for a Card
The first thing on people’s mind for getting a personal credit card is determining if they’re eligible or not. There are a few determining factors for approval with business credit cards. Issuers will first look at your personal history along with your business credit if you have any. Your usage of personal credit determines if you’re worthy for business credit.
With that in mind you should look to see if you’re eligible for a new business card. That is done best through looking at a credit card for your business. Check to see if you’re personal credit will favor you in qualifying for a business credit line.
Businesses should know how much personal risk is associated with getting a business credit card. For example, under certain circumstances you are actually liable for some debts under a business line. Make sure that you know all of your rights and anything that will fall on you in the event of a default, late payment, or fees.
This is especially important considering business cards come with substantially higher credit limits. Small business owners are much more likely to charge more than an individual customer using a personal credit card. Many business owners will carry a balance greater than $10,000 and a small amount comfortably hold anywhere from $25,000 or more on their cards.
These numbers alone should suggest that the following credit limits are much more than those amounts. Some of these cards won’t carry any major limits at all. In that case, personal fiscal responsibility is paramount to credit success.
Cards are great to be paid with and even better to issue to spend with. Cards can be sent out to employees under the same account. These cards are monitored and come with special privileges and restraints on an individual basis. These cards can be accessed for a streamlined expenditure approach.
Another major distinction pertaining to business credit is in regards to payment terms. Cash flow isn’t on some kind of clock like wage given to a personal user of credit. It is much more unpredictable for certain types of companies. Payment terms for a business credit card are usually due within 30 days.
With that being said, there are times that business owners are able to finance over a period of time. This is different than the usual round of monthly routine payments. There is a greater ease of flexibility and additional benefits to business credit if used correctly.
Lucas Miller shares his thoughts, tips and opinions about business finance matters in his articles which appear on a selection of business blogs.