Establishing an excellent business credit score and getting a business credit card is similar to a rose above its thorns where the thorns are the trials and financial downsides of your business. It is because business credit cards provide you an easy access to your immediate working capital requirement. Through proper use of this card, you’ll get to see your business bloom and grow.
Every business has different financing needs and working capital support. Some need it for inventory build-up, or to fill the gap of uncollected receivables, or to pay suppliers, or to even support the travel expenses of the business.
In choosing the right business credit card for your business, you must take into consideration the nature you’re into. Does the nature of your business require frequent travels to attend to client calls or trade shows? Or you need to constantly build up an inventory?
Every business cards have its own rewards offered or freebies that might suit your business model. So before you get to apply for one, check the possible features that’s an advantage to your business. Here are a few things you have to know.
Understand Your Credit and Limitations
While many financing products are available in the lending companies, business credit cards pose some advantages over the others, such as greater credit limits as compared to your personal credit card, and flexibility and easy access than applying for a loan. But before you enjoy those mentioned, you have to qualify in order to have it.
The usual credit limit for business credit cards are from $10,000 – $50,000, also depending on how big or small the business is. Granting a business credit card takes a lot of risks as compared to personal credit cards. For this reason, lenders usually investigate if an entrepreneur has an excellent personal credit score before giving their business a credit card. Because an individual with a good credit score is tagged as a good payer.
It’s also good that you allot more to your business by requesting a higher credit limit to cover another possible future profit opportunity for your business.
However, don’t despair if you have an average or even bad credit which holds you to be approved for a business credit card. You can still use your personal credit card for business purposes and still gain rewards from it. Some cards offer annual percentage rate with zero interests and can be paid off for a longer period of time. This is substantially a free loan if you pay off your full balance before the period ends.
Lastly, if your business requires you to have more than $50,000 credit, it’s wise to seek and explore an SBA loan.
Choose a Card that Fits Your Business Needs
With sufficient background on business credit cards, you can now do some research on various credit card companies and apply for those who offer terms applicable to your business. A good business credit cards are those who offer the rewards and benefits.
If your business requires frequent business trips for you and your employees, or your salespersons are often on the field to do some business, try to look for credit card companies that offer attractive travel rewards, discounts or free lounge passes, free airline tickets, or hotel accommodations.
For those businesses that require restocking of employee’s supplies, or constant inventory build-up, then getting a credit card cash back will work best for you. Through cashback, you’ll be able to get supplies at discounted prices or literally get cold cash as a reward.
Pay on Time and Avoid Overextending Your Credit
It’s still best if you get to be approved for a high credit limit as credit agencies uses data on how often or high you use your business credit card in determining the business credit score. By requesting a higher credit limit, you’ll have plenty of room to transact your card.
Some credit card companies allow the business credit card to get card extensions for employees, thus allowing them to use the business credit card for a certain credit limit. This helps to reflect how often you use and pay the business card.
With regular use and timely payments if business credit cards, you’re building a good credit score for your business. This is a key to allow business growth and support for future expansion. By establishing a good credit standing, you’re giving your business greater chances to be granted a higher loan and capital raises in the future. These are some strategies to help your company reach the enterprise-level business ladder.
From merely conceptualizing a business you want to be involved with, to cultivating it and growing the business to gain higher profitability, an entrepreneur must be wise enough to take advantage of the present resources available to them that might help in growing the business. This can be achieved through careful planning and business study, and through the use of business credit cards to partially provide capitalization and earn rewards while establishing an excellent business credit score.
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