Small Business Credit Cards are a fairly new offering in the credit card market, although business credit cards are a long-established business medium, popularized by American Express and made widely available by Visa and MasterCard. Recently major credit card companies have begun aggressively soliciting small businesses through very attractive incentives and offers on their Small Business Credit Cards. However, the most attractive part of Small Business Credit Cards is that it can be effectively leveraged into financing and start up capital.
With Small Business Credit Cards it is possible to purchase beginning equipment and stock, advertising and other basic necessities without the hassle of securing a small business loan.
While Small Business Credit Cards are very similar to loans, they offer more flexibility and substantially lower interest payments.
If you choose to use Small Business Credit Cards to fund your start up, you can spread the payments out as your business grows, frequently with lower interest rates, better flexibility of payment and spending options and other added benefits, far beyond what a small business loan has to offer. This can be a distinct advantage over the traditional loan as the loan term period is usually 12-months or less, while Small Business Credit Cards have a revolving, re-chargeable line of credit to use as needed or to hold in reserve for large purchases or emergencies.
Effectively, Small Business Credit Cards are indeed mini-loans, but with the added benefits of lower interest rates, rebates, point rewards, frequent flier miles or other premium offers. Another advantage of a Small Business Credit Cards is that you can pay off beginning-of-the-month expenses using your card, and then earn that money back throughout the month. If you pay off the balance, you would have effectively used a no-interest loan!
Keeping personal and business finances separate can often be difficult for the new business owner, but Small Business Credit Cards can simplify this through a line of credit dedicated only to your business. It is possible to download all of your account information to many different kinds of financial software that your business uses, such as Quicken or MS Money. This way you will able to better track your cash flow and expenditures without the added cost of time.
Choosing the right type of Small Business Credit Cards can be a very time consuming task, but you will need to make sure the card you choose fits your needs. If you will carry a balance from month to month, you will want to find a card with the lowest interest rate available. If you plan to travel, go for a card with frequent flier miles, or if different merchants offer you their cards, carefully examine the spending limits and look for no fee or smaller fee cards. While this is not the usual practice, some Small Business Cards still offer the ability to set flexible spending limits for different expenses, rather than one single spending cap.
Small Business Credit Cards can be a wise choice for an entrepreneur with benefits, flexibility, and choices not offered via a traditional small business loan. Choosing the right mix of financing can help you plot a successful course for your small business.