Disclaimer: In no way, shape, or form is this credit advice or loan advice as this information may not apply to all of your businesses. This is a suggestive tactic to increase future possibilities for your growing business. Please do your own research before applying for and considering taking on new debt even if it is for your business.
Small businesses need all of the flexibility that they can get. Some of you may already be beyond this stage. Some businesses have gotten small loans or advancements from family or wherever, but there are some of you that cant scale because of limitations. There is risk, as it is with any kind of debt. There is also interest like any kind of debt, but, you can increase flexibility with a business credit card if used correctly. Fund are readily available and payments aren’t too drastic unlike loans where if some conditions are not met, it can become real bad, real fast. Most of us will argue with the fact that it is hard to get a business loan anyway, so what other options do you have besides family or the lottery? (Hey, I still play the lottery sometimes) If you have a business that is truly growing then the pros will outweigh the cons at a significant rate and will continue to get better over time.
First, if you are able to avoid using credit or obtaining new debt in any way you should do so. If you do have to use it, use it to your advantage. A business credit card could help you optimize savings and boost your credit score. In the long run, if you need a serious influx of cash, a bank loan could then become very available to you. (At least your chances of approval might increase).
Even though we are ending this year’s tax season already, making most or all of your purchases using your business card would have saved you tons of time. There would have been no rummaging for receipts or different statements trying to find a write-off. That information would have been available to you in one or two places. You would be able to track most of your purchases in a single login. You could do that with a debit card of course but you also would not get the benefits that the card company offers.
Most business cards offer generous rewards. If you travel frequently for your business, you could rack up tons of free miles. If you spend a keep a rotating balance, you could save on huge cash back rewards. If you are able to pay back the balance every month – you would benefit substantially. Before applying for a business credit card, take the time to view your options and they can offer you. Decide which cards will benefit you short and long term. Another unforeseen reward could be something as simple as taking on a new employee and having a card available for them. This could do wonders for your time and your business.
Managing and Seeing your Cash Flow
So now that you make most of your purchases with your card, they will more than likely provide analytics for you to see what you are spending money on. This information can be useful to you showing trends, places you can get rid of baggage, and places you could spend a little more or a little less. Also, imagine being able to pay off your own vendor(s) while waiting on a payment to clear from a customer. This is an example of flexibility.
Things to SERIOUSLY consider
It’s still a credit card at the end of the day which means interest WILL apply. Pay attention to that cause interest at a high amount could leave you swimming in debt. A credit card in any aspect is a tool or a buffer to get you to the next objective. It’s never to be viewed as free money because you have to pay it back. Debt could hold serious risks for you and your business so DO NOT take it on lightly. Many business credit cards have higher credit limits than personal credit cards, so you could theoretically wind up falling behind on your payments quicker than with a personal credit card. Don’t overextend your business in credit card debt or any kind of un-planned debt. This debt will also affect you directly. Your score could take a serious hit and any plans you had towards growing your business could be postponed or worse. Done right, you could build a significant amount of buffering room within your business and your credit rating. Running a business usually means you will want to have available funds AND available credit. The only rule that we say for you to directly apply is, pay the bills on time and always pay well over the minimum. A good rule of thumb is to keep utilization at about 30% monthly and pay the balance off as soon as possible and you will never go wrong.