If you are running a small business, you will receive many offers regarding small business credit cards. You would probably think that what will be the benefit of this kind of financing and whether these cards are different from other cards?
According to one survey, more than 40% of the owners of small businesses have used this kind of credit for financing their businesses. It is the easiest and quickest way to fulfilling short-term financing needs of businesses, and it also boosts up the purchasing power of your business. While, on the other hand, business has to bear some interest cost, therefore, should be carefully used.
These small business credit cards help in making big transactions and tracking your money. Powerful built-in software enables it to record all the transactions made through it. Credit for small businesses offer business persons easy access of purchasing and withdrawing cash. If the full payment is not repaid in the prescribed time, then interest is charged on the amount. A number of creditors also offer different kinds of rewards, for example; gift hampers discounts, etc.
Major Pros
Here are some major advantages of using this kind of credit for business purposes.
- If your business is not established, and you do not have satisfactory credit history for taking loan, these cards will be best for you.
- These types of credit cards are very convenient for financing purposes. You can easily access your money if you want to make any transaction.
- In case your account receivable are not recovered, or you are facing fewer sales, and you are facing some financial problems, business credit cards give you the necessary financial cushion.
- In modern world, more than 80% of business transactions are made online. This kind of credit line will help you to make purchases online.
- Some business credit lines offer some rewards for using it. Some offer discounts or surprises and some offer airline tickets, etc.
Cons of Small business credit cards
If you want to apply for small business credit cards, you must know some of its drawbacks. Here are some biggest disadvantages of using these cards.
- No doubt, business cards are easy to use but there’s some price that you have to pay. Such credit have been usually high interest rate as compared to consumer credit or bank loan. Interest rate will accumulate if you do not repay the full amount within a given time.
- In most cases, your personal security is required for paying off the debt. In case you are unable to pay the debt or delay in payment, it will affect your personal credit history, and it will show that you are unable to borrow money. In some cases, you also have to pay a higher interest rate.
- One of the major drawbacks of business credit card is its variable interest rate. The company that has issued your card may vary the interest rate.
Credit cards are one of the financing tools for business persons. Before using these cards, you must completely understand all the terms and condition of cards, interest rates and must have a proper system to manage your activities. Some of the best small business credit cards are “Ink by chase”. This card has no annual fee and has two types. Other most popular cards are American Express and Visa.