One thing that most small businesses have in common? They don’t want to stay small for long.
Small business owners aim to grow their enterprises. While some simply save up enough revenue to use to fund their business expansions, many others finance this growth through debt. For small business owners, that often means using business credit cards.
he National Small Business Association reports that, in 2014, about 36 percent of small business owners turned to credit cards to meet their capital needs. If you are considering this approach, here are some suggestions on getting the best business credit cards for your company.
Comparing Business Credit Card Offers
The first thing to keep in mind is getting the best “metrics” that are associated with your business credit card. These include:
- The lowest possible interest rate
- The highest possible credit limit
- No (or a very low) annual fee
- A zero (or very low) minimum monthly charge amount
- The best possible rewards package
When it comes to credit card rewards, it’s important not to place too much emphasis on the introductory offer or signup bonus. While having a 0% interest rate for six months or 20,000 bonus miles upon signup is nice, they won’t help you in the long term if you get stuck with unattractive rates or fees.
Perks and Rewards
Look for purchasing perks that are suitable for your business. For example, if you travel a lot for business, a credit card with frequent flyer miles could come in handy. If you conduct business outside the U.S., a card with no foreign transaction fees might be appealing. Credit cards which give you discounts on gasoline could cut costs for businesses that use delivery or fleet vehicles. And, if you earn rewards points that can be redeemed for much-needed office supplies or equipment, then this type of card may be more to your liking.
Today’s business credit cards offer more than just rewards and perks; they can also give you access to valuable online tools that can help organize your business. Some of these tools are:
- Online bill pay
- Detailed monthly, quarterly, and/or year-end statements
- Statements that are compatible with QuickBooks or other accounting software
- Budgeting and forecasting software
- Tax preparation assistance
- Employee expense monitoring
Read the Fine Print
Even more so than with personal credit cards, it’s vital to read the “Terms and Conditions” portion of business credit card agreements. For instance, you shouldn’t just know the card’s annual interest rate, but also whether or not that rate is subject to change without much notice. Familiarizing yourself with payment deadlines and grace periods is also important; otherwise, it’s easy to miss a payment when your business is juggling multiple invoices and expenses. Be acutely aware of the consequences for falling behind on your payments (like an interest rate hike, late payment fee, or suspension of your credit privileges).
Business Credit Card Tips and Hacks
Finally, here are some other tips for obtaining and using business credit cards:
- Because the application process is more complex than for a personal credit card, take the time to gather the necessary documentation before applying.
- Be aware that your personal credit history will be reviewed as well as the creditworthiness of your business – so be sure to keep your personal credit score up.
- Pay off your business credit card balance every month (or as frequently as possible) rather than keeping a revolving balance from month to month. Carrying too much credit card debt can have a negative impact on your business’ balance sheet.
- Carefully screen and monitor any employees who have access to your business credit cards.
- Never, ever, ever, ever use your business credit cards for personal purchases. Keeping those charges separate not only helps your business stay organized, but it also provides you additional legal protection for your personal assets if your business gets sued.
