5 Reasons You Need a Small Business Credit Card
Reading Time: 4 minutes Virtually everyone has a personal credit card that can be used to make the easiest purchase online, but do you pay attention to your business finances as much as you do your finances? It is easy to think that there are no credit reports and scores to pay keen attention to, but on the contrary, you need them as much as you do your personal credit reports.
Credit cards have gradually grown to be the backbone of every business, and if you are looking to build a solid small business, a credit card should be a great option to consider.
The danger of running your business with your personal credit card is that you eventually create a blurry line between both ends. With time, you will begin to cut into your own personal finances and not be able to manage the expenses and income solely from your business effectively.
The world is constantly working towards having a cashless society, where everyone can freely purchase goods and services on the move without carrying around large amounts of money. You can make purchases with the credit card for your small business, without tampering with personal funds and account.
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Here are a few reasons why you need a small business credit card:
Table of Contents
#1. It helps separate personal and business expenses
You will be doing yourself a massive favor by separating your personal and business expenses, as it helps you to see how exactly your business operates. It also helps you to rule out your tax and account well for what goes in and out of your business. You may try to prove smart by managing both concurrently on the same account, but you will be saving yourself a lot of hassle by drawing a line. A business needs to have its own clear accounts and financial records, especially if it is aiming for a longer-term operation.
Quite alright, this could be a norm in the early days of your business, but as you grow, the ideal thing will be to let the business have its own financial record. Also, you might run into debt from trying to finance your business account with your personal funds too often, and if the business eventually fails, you are in a deep financial mess. Fix this while you can.
#2. Access larger amounts of capital
Every business needs a capital to start with, but it is not always easy to get unless you have enough personal funds to invest in your business. If you need to acquire a loan, your business credit card will get you a quality lender. No serious lender would want to send huge amounts of money into your personal account, where it is likely that you spend it on personal use. Many factors determine how much capital you would get, and this includes the purpose of the loan, existing collateral and a business credit score. Both your personal and business credit scores count.
Depending on the kind of business you run, you may need a significant amount of loan either during early days or along the line. A business card can do wonders for your business.
#3. Best way to build credit reputation
Business credit cards will help you build a credit reputation, which is really needed in a business, as the interest rates from financiers and sponsors often depend on your credit scores. Your business credit history tells how creditworthy you are and helps financiers to weigh their options on if and how to invest in your business. Your credit score increases when you use your card responsibly and pay back loans consistently without defaults. This will help you get lower rates if at all you need a business loan. On the other hand, if you aren’t consistent with payments, you will have a poor credit reputation and won’t be able to get all the advantages of owning a business card.
#4. Get better interest rates
One of the best desires of anyone taking a loan would be to get the best interest rates, and owning a business card might be that click. It could cost you as low as 6% APR or as high as 150% APR to secure a loan, and what often determines this is a credit card. A business credit card will help you acquire the best of all, especially if you have maintained an excellent credit history. You can save more money over time by simply owning a business credit card and consciously maintaining a good record and reputation, which will then amount to lower interest rates.
#5. You have no established business credit
Another reason why you need a business credit card is if you do not have an established business credit already. The finances of your business should be one of your priorities while setting up the business and owning a business credit card will be a smart move.
Conclusion
We are in the technology age where people move around cashless and would rather work with credit cards. With your business card, you can make purchases and acquire services for your business via other businesses who employ the cashless policy. You would also want to show how dedicated and committed you are to your business, and why you deserve that loan. No matter how great a personal credit score is, it will never stand in the place of a business credit score. Think about future opportunities and take the step today to build your business credit card.
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