There are a number of small business credit cards out there which are especially made to suit the requirements of small business owners and assist them in managing their business finances. With these credit cards, the small business owners get access to a revolving line of credit, within a set credit limit. They can make purchases and withdraw cash in accordance with the need of the company.
However, just like a regular credit card, a small business credit card will also incur interest if the bills are not cleared within the billing cycle. New credit card apply may be conducted online, by a bank or through any financial institution. It is always a good idea to compare the various cards and have a run through the rewards and features it offers to choose the best one from your business.
Hence, to get the best small business credit card- a card that will help in business growth- it is important to check which card will provide the most convenient method to access financing for short term needs and can increase the purchasing power of the company. Although they are marketed as an attractive alternative to a line of credit, certain costs have to be met with and the credit card must be managed properly to avoid penalties and fees.
To use a business credit card effectively, certain strategies can be applied:
- Make sure the credit card make you accountable. Choose a credit card that would help you with pre- approvals, that require you to keep track of receipts vigorously, where there is a credit limit above which one would not be able to spend unless the previous bills are cleared and likewise. One has to be smart and meticulous and this plan has to be put in place even before the credit card arrives, with no exceptions made.
- In case of small businesses, it would not be a good idea to hand over a credit card to everyone who is in position of authority. It might seem that the business is growing, but it could be very easy to lose track of the expenses this way, especially if the people handling the company credit card are not careful. This could mean a loss of accountability, as mentioned earlier. Set some ground rules that no reimbursements would be made without receipts and the question of seniority also needs to be decided. Limits have to be set regarding expenditure as well, as to not use the card at the first sign of financial difficulty.
- The best business cards will help you to set up activity alerts, informing the business owner that the card has been used through SMSs and emails. This could come in handy if an employee tries to use the card unauthorized. Being a bit watchful will save a lot of hazards in the long run.
Other details are to be provided are as follows:
- Provide the accurate business name, along with the business address and contact number.
- Provide the tax identification number. The PAN and TAN has to be provided.
- Make sure that the business has a good credit history and go through it yourself first to rectify any mistakes it might have, or update any new financial progress that the business might have recently made.
- The business type and business structure has to be mentioned, whether it is a partnership business or a corporation. In case of a partnership, the partner’s details might be asked for at a later stage.
- The industry to which the business caters to and the nature of the business- whether it manufactures, or sells or both. The target customer base, and whether the business is seasonal in nature can also be major determining factors.
- How long has the business been operating and the number of employees that the business has. If there are employees who are not in the direct payroll, then include that.
- The annual business revenue that is generated. Documents to support the figure that you put down in the application have to be provided for verification later.
- Estimated monthly expenses of the business and does the business has any loan for which it is paying EMIs.
Small Business Credit Card is considered to be one of the best by industry experts and businessmen alike because it helps the small business owner with all the above mentioned factors. It is easy to qualify for the card and it provides a financial cushion when the business is going through a rough patch- delays with invoices and small margin of profits are problems that can often plague a start up.
The small business credit cards gives them the convenience to look after the business properly. One can keep track of the expenses online and there are a number of rewards and incentives to be enjoyed. It can be a tool to build business credit and later when the time comes to apply for a business loan for the expansion of the company, the creditor will definitely see how the finances had been managed until now, with the credit card playing a huge role in getting the loan approved.