Understanding the Benefits of Credit Card Financing for Your Small Business

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Conventional wisdom would be cautioning you against using credit card financing for your startup or small business. However, times have changed and credit cards surely have become an integral part of effectively launching a small business or startup today. If you consider the statistics, you would know that credit cards are currently regarded as the third most popularly used source of funding for small businesses after bank loans and the revenues from the business itself.

As per https://www.forbes.com, credit card finance is the first most convenient and easy opportunity for small businesses to access revolving credit. When you have a credit card at your disposal, you could at once effortlessly go about covering any existing cash flow gaps and paying off all your short-term business expenses without any need to apply for a loan. This sort of flexibility that is promised by business credit cards could prove to be a huge advantage for particularly, those businesses that have more sporadic revenues.

Moreover, credit cards allow you to focus on building your business credit that lenders would use for evaluating the eligibility of your business for a loan in the future. By effectively separating your business and personal finances, you ensure that your personal credit score would not be impacting adversely your business’s credit score or vice-versa. Let us explore the benefits of using credit card financing for your small business or startup.

Helps in Expanding Your Available Credit

If you have fairly ambitious aspirations for growing your business, your growth may be hindered if you use your personal credit card even for business purposes. This is obviously because you would be left with less credit for your family expenses simply because you have used the available credit already for meeting your business expenses or vice versa. Hence, it is important to have business credit cards for solely business purposes.

Once you are having a separate credit card for personal use and another one for exclusively business purposes, you could have access to more potential credit at a time for your family and business. Your business credit card could be an easy and convenient way of quickly accessing funds for short-term requirements and could effectively boost your organization’s purchasing power. We know that business credit cards are often marketed chiefly as an enticing alternative to a conventional line of credit. Just like any other funding source, your business credit card could be used at a cost; hence, it must be used carefully and with caution.

Good for Establishing Your Business Credit History

When you start using a business credit card exclusively for your business expenses, you are gradually establishing two separate credit histories one related to your business alone and the other to your personal finances only. We know that often small businesses encounter loan rejections and denials or they get loans at pretty unfavorable loan terms since they do not have a robust credit history related to their business alone. There has been a boost in the significance of business credit in recent times and factors indicate that this trend would be continuing during the next few years. You need to acknowledge the fact that business credit is growing in importance by the day.

Helps in Saving Time Thanks to Technology

A business credit card could be used for conveniently paying for your business expenses and purchases. Moreover, these cards could help in providing lucrative rewards, smoothening cash flow, and offering superior fraud protection. As per the Small Business Credit Survey of the Federal Reserve in 2019, 52 percent of the companies with 1-499 staff members use credit cards regularly. A business credit card would be offering advanced technology for efficient recordkeeping work on your behalf. It helps in managing easily your expense budget with relatively less work for you. It tells you precisely where you seem to be spending and exactly how much. It would help in keeping all your business records perfectly-identified for specific tax purposes thus, making tax filing for your business less stressful. It is, therefore, of critical importance on your part to evaluate meticulously the technology provided by the credit card provider. The right technology could drastically minimize the amount of manual work required for managing your business finances. You must ensure that it is the technology that has been specifically designed for entrepreneurs owning small businesses so that it delivers the right information for your business use.

Helps in Earning Lucrative Rewards

Your business travel credit card could be offering lucrative rewards; however, you need to choose wisely. If you are typically using one specific airline, you may consider that particular airline’s credit card since you could get perks like free checked bags, priority boarding, and the ability for earning status quickly with that airline. We know that the Southwest Rapid Rewards program is based primarily on the exact number of trips taken by you. You could easily earn valuable rewards by using your credit card.

However, you must see how conveniently you could redeem those rewards and use them. You must consider the ease and flexibility in redeeming those rewards. See if it is convenient and quite easy to redeem those rewards online. Are you free to use these rewards in many different ways such as gift cards, cash back, or travel cards? Consider all these factors while redeeming your rewards.

Provides Exceptional Fraud Protection

Business credit cards are known to provide outstanding fraud protection. We understand that under federal law, the cardholders would not be held responsible for any amount over the initial $50 in terms of fraudulent charges. Moreover, a majority of the issuers provide zero liability. We know that business debit cards would not be offering this sort of protection to businesses under federal law. Hence, a business credit card is the right choice for most occasions.


A credit card is an effective tool for building credit. If a credit card is used with responsibility by paying the outstanding bills on time, by always making it a point to pay more as compared to the minimum amounts due and not exceeding the credit limit, then it could be an easy and efficient way of creating a positive and robust credit report or score for your business. A robust credit score could help get you a future loan that too at a lower rate of interest. Always remember that if you use your credit card irresponsibly, it could end up hurting your credit.

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