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If you own or operate a small business, you may be looking to get a small business credit card to help you or your staff pay for company related items. It’s a great way to be able to keep track of costs without having to offer reimbursements to yourself or your staff. In addition, it doesn’t count against the credit report of you or your employees, so your business performance doesn’t risk leaking into your personal finances. Lenders have been increasingly offering competitive deals to entice small business owners into applying for their credit cards.

In this article, we will overview what you should look for in a small business credit card. The article will also take a look at the various advantages and disadvantages of having a credit card for your small business.

What to Look For

When deciding on a small business credit card you should look at the following factors before deciding which card suits your business best: personal liability protection, billing protection, interest rates, and additional benefits.

  • Personal Liability Protection – Unfortunately, some credit card providers will attempt to make you personally liable for the credit performance of the small business card. This means that if you default on payments, or don’t pay certain bills on time, it could impact your personal liability. If you want to make sure the performance of your business is separate from your personal life you will want to make sure that you don’t have a lender that will enforce you to tie your personal credit report to your small business card.
  • Billing Protection – When you decide on which small business credit card to opt for you should take a close look at the billing protections they afford you. Consumer credit cards often offer various services to those who may need to contest charges and other forms of billing, but small business credit cards have less of a track record for this. Make sure the terms and conditions ensure you won’t be exposed to paying for fraudulent charges.
  • Interest Rates – Like any credit card, you want to make sure the small business card you choose has the lowest interest rates possible. Since small business cycles will end up meaning that you inevitably carry balances on your credit card, it is important you use a card with as low of a rate as possible. Small business cards have notoriously high interest rates, make sure to research the lowest possible ones.
  • Additional Benefits – Like consumer credit cards, lenders often offer various sign up bonuses or rewards incentives for small business credit cards. There are various cash back cards that can help your business recoup some of its spending – make sure to check it out various offers before making a decision.

Advantages

Small business credit cards are a great way to help bridge gaps in cash flow that your business may have. In addition, they’re the perfect way to make sure that you and you employees don’t have to be reimbursed for business-related costs. It can help you separate your personal financial situation from your business. You want to make sure that you don’t expose yourself to potential business-related financial issues – and a small business credit card is a great option. In addition, they’re relatively easy to apply for when compared to other forms of small business credit.

Disadvantages

Small business credit cards have higher interest rates than many other forms of credit – this is because they are unsecured and don’t require as long of an application process. This can prove to be costly for your business in the long term, especially if you carry a large balance. In addition, you open yourself up to potential fraudulent charges by staff. If you give a small business card to an employee and they decide to rack up the bill, it can be hard to get the money back from the lender. Make sure that you trust yourself and your staff to use the card responsibly. Big purchases that will take time to pay off may be better for a different type of finance, such as a traditional business loan.

Verdict

Small business credit cards are used by millions of Americans every year to help bridge gaps in cash flow. They also take the head ache out of paying for various business-related expenses. It is important to consider the four different factors we outlined in this article prior to making a decision on the best small business card to opt for.