Everything you need to know about business credit cards

credit cards

Signing up for a business credit card no matter what the business age/industry, is always a better and an easy thing to do. Having a business credit card gives you many benefits along with just spending money. But how do these business cards work?

Business credit cards function similarly to personal credit cards. In that they provide access to a line of credit directly at the point of sale, as well as bonuses, and benefits. Your business credit card, unlike a personal card, is designed to fund your company’s spending rather than your own.

This is the essential information till you find out which card you want to use as your business credit card. Let us see what a business credit card is and what should you know about it.

  • Easier for Applying Loans

Unlike other credit cards having a business credit card saves you from a whole lot of work. While applying for a small business loan you need to have a strong revenue, different kinds of documents, and what not. Having a business credit card helps you lessen the number of questions asked by a bank employee. The application and underwritings are a matter of minutes when you have a business credit card, unlike applying for loan which takes days or weeks.

Credit cards give you instant action for financing your business. This may include paying for business meetings, filling the petrol tank while running between the meetings, and lot more. Having a credit card is better than carrying cash with you everywhere. Online payment options are available almost everywhere which makes credit cards useful and lifesaving.

  • Credit Card Issuers Consider Business and Personal Finance

Business credit card issuers might ask you for your business and personal finance for setting the credit limit. Do not worry if you are a start-up with little to no business income – as the primary cardholder, you will also submit your personal income and outstanding debt on your application. That is how they will figure out your debt-to-income ratio, which tells the card company if you have the financial means to take on more debt. And if you can show that you can pay back what you owe, then your issuer might approve your application.

  • Credit Card Issuers Might or Might Not Affect Personal Credit Score

Even though the credit card issuers check your personal credit while underwriting process, using a business credit card might not affect your personal credit score. It all depends on the issuer, whether they score your card positive or negative or both to the consumer credit bureau.

Having said that the issuers do not always share your credit score with the consumer credit bureau. A strong business credit card score can increase your purchasing power and future loan plans.

  • Perks and Rewards

As your personal credit card, the business credit card also provides you with travel insurance, cash back incentives, redeemable points.

Unlike credit cards business credit cards may give you reward program which will be specially generated towards businesses. The reward will be 2%, 5% or whatever depending upon the type of purchase you do.

These rewards will be most probably work on food, tools service for your business, internet, etc.

  • Employees Can Use Your Business Credit Card

It is a huge advantage but giving this opportunity to an employee should be well thought about. Set alerts on your card to know about the card expenditure. Give the card to the employee who needs it the most. Keep an eye on the financial expenditure for better workspace.

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