Those who are running a small business may have received several offerings regarding the small business credit cards. One may not know the pros and cons of this kind of offering have and whether this card may be different from the other types.
Statistics from a survey that was conducted proved that owners of small businesses have utilized this type of credit as a form of business finance. It is the fastest and simplest method of fulfilling the short term financial needs of the business. The business credit cards also boost the buying power of the organization. On the other hand, the business should be ready to bear some costs in the form of interests and hence should be very careful when using them.
The small business credit cards are useful while making big transactions and keeping track of money. Built in software will enable it to keep a record of the transactions that are made through it. In the situation that the full payment is not done within the required time interest will be charged on that amount. There are creditors who also have varying rewards such as discounts and hampers.
There are some benefits of using this type of credit for business purposes.
• In case your business has not been established, and you do not have a credit history that is satisfactory enough for taking up a loan, a small business credit card would be most ideal.
• Small business credit cards are extremely convenient when it comes to financing a business. It becomes easy to access the cash in the situation that you would want to make any kind of transaction.
• In the case that your account receivables have not been recovered yet, or you are getting much lower sales or facing some complications with your finances, the business credit cards will provide the much needed financial cushion.
• Today, most of the business transactions are done online. Having the business credit cards is helpful in making online purchases.
• Some of the business cards come with rewards and discounts, which the business can enjoy.
Disadvantages of the Small business credit cards
In case you would like to use the small business credit cards, it is important for one to understand some of the drawbacks. Below is a list of some of the main disadvantages:
• The business cards are simple to use but they is a point where one has to pay. Such credit is usually high interest as compared to the bank loans and the consumer credit. The interest rates will accumulate in case a repayment of the full amount is not done on time.
In majority of the cases, one’s personal security would be needed to pay off the debt. In the situation that paying off the debt becomes challenging or there is some delay, it can affect the credit history of the business, which makes it hard to get credit in the future. In some situations, it is vital to pay a high interest rate.
• One of the main setbacks of the business credit card is the interest rate that keeps changing.
In a nutshell, business credit cards act as financial tools for business people.