Business Credit Cards 101

Part of the reason business credit cards remain popular is they’re sometimes a jump-off point for bank offerings. Once a company’s good credit history is established, banks and other lenders are more prone to offer micro-loans, based on repayment performance of the small business credit cards it originally offered.

Business Credit Card 101 Basics

Unsecured credit offered through small business credit cards bypasses the many hoops required for traditional credit loans, especially those offered by the Small Business Administration. Undercapitalization remains the number one reason for business failure in the U.S. today, followed by insufficient business knowledge. Usually by the time one or both of these challenges have been achieved, the business has failed. Business credit cards smooth out the bumps of day-to-day business operations.

Alleviating Cash Flow

Rarely is cash flow consistent even in the best of businesses. Seasonal adjustments and business down-turns due to unforeseen events must be dealt with in order for a business to thrive. Payments to suppliers and subcontractors must be maintained no matter what. There’s an old saying: "It all flows downhill," meaning that once a business receives cash it proceeds to pay the next vendor on its list and that vendor pays his and so on.

Having a source of credit to tap into can help alleviate extended payment requests to vendors and sooth nerves so the vendor doesn’t cut off all credit. Learning business credit cards 101 increases the purchasing power of small businesses by freeing it from the ebb and flow of accounts receivable. Cash paid out isn‘t restricted to cash on hand. The 30-day net clause has been and continues to be a lifesaver for many small businesses. Low interest credit cards are ideal to assist with balance carry-overs of 1-3 months.

Which Credit Card Is Best For You?

Credit cards with no-preset spending limits, may require an annual fee but offer flexibility, especially if spending is subject to spikes due to inventory purchases required to start a season or react to seasonal trends. Cash businesses that don’t need regular inventory purchases can benefit from business credit card for emergencies. The best deal will be those offering moderate credit limits and low annual percentage rates (APR) where an emergency purchase won’t break the bank of daily operations.

Rewards Business Credit Cards

Business with employees who log frequent travel miles and have client entertainment expenses can benefit here. Frequent flyer mileage and cash-back rewards for normal business spending can help increase the bottom line.

Automatic Expense Reporting Eases Workload

Record keeping and expense reporting are crucial to profitability. Credit card monthly or year-end statements can assist a small business by monitoring and categorizing spending, easing the year-end tax prep workload.

Business Credit Card 101 Offers

• Advanta
• American Express
• Bank of America
• Chase
• Citibank
• First Premier
• HSBC
• MasterCard
• VISA
• Four Oaks Prepaid Cards