If you are a small business owner, you are going to eventually be faced with a decision regarding the use of small business credit cards. Unless your cash flow situation is strong, you will probably want to limit the use of credit cards as much as possible. But there are simply too many situations in which not having access to quick credit via the use of cards will arise. If you are on a business trip and want to rent a car, you will find it very difficult to do without a credit card.
There are other benefits to having credit cards for your business use. Many card companies offer some protections for your business like insurance for your car rental. There may also be perks for mileage on airlines depending on the card being used. If you or someone in your business travels often, this can save money on travel expenses.
Some small business credit cards give you the option of 0% interest or rewards such as cash back. The choice will depend on whether you plan on letting balances run for short periods of time. If this is the case, the 0% option is best. If you are one who pays off your balances in full every month, then this option will not do you much good. Go for the rewards options instead.
It’s really important to use credit cards in your business only as short term financing solutions. Although interest rates on business credit cards tend to be less than on consumer credit cards, they are still higher than longer time financing options. Using your business credit cards for long term financing can eat into your profits and can make other financing options more difficult to obtain.
In certain instances, it may be okay to finance small portions of your business operations if you find your business to be short on cash. You should be confident that the sales you bring in during that operational period will be enough to service that debt. If you have any doubt, it may be wise to seek other options. Any accumulation of high interest debt will end up hurting your business and should be avoided as much as possible.
It would be a big challenge in today’s business environment to do without small business credit cards. Business moves fast and a business owner needs to have to right tools to make nimble decisions that may require the use of these cards. As long as it is managed in a responsible manner, there should be no problems in using this as a financing choice.