Yes, you read the title right. You can make your business credit card work for you.
While conventional wisdom argues against the usage of credit cards to finance your business, a little research and some planning can go a long way. With financing being the way that it is, many entrepreneurs have begun turning to plastic as a means of getting their businesses off the ground.
Having gotten all of that out of the way, we ask the magic question, how can you make your business credit card work for you?
1. Credit cards are a source of quick cash
Credit cards offer business owners a revolving line of credit that is readily available 24 hours a day, 7 days a week. With a credit card, you’ll be able to cover any shortfalls in your cash flow immediately.
Following this, your credit card provides you with a 30-day grace period to repay the amount borrowed without incurring any interest. This can be extremely beneficial for small business owners with sometimes sporadic cash flows.
A business loan on the other hand, has to be applied for and approved prior to the release of funds. Furthermore, business loans charge interest on the amount borrowed which places additional strain on our finances.
2. Make use of the benefits
Just like personal cards, business credit cards offer a variety of reward programs and other incentives. These can range from frequent flier points to promotions and discounts on office supplies.
Go for credit cards whose reward programs are most in line with the nature of your business i.e. if you travel a lot, search for a card with a frequent flier program.
When you’re shopping around for a credit card, take the time to see what everyone else is offering. In such a competitive industry, chances are banks would be climbing on top of each other trying to outdo their competitors.
3. Avoid making late payments like the plague
While credit cards can be a godsend in an emergency, always keep in mind that credit cards charge frankly extortionate rates on any outstanding amounts. Besides hurting your credit score, interest payments can quickly balloon out of control when not managed properly.
Hence keep a tight control of your credit card expenditures and make sure that full payment is made at the end of every period.
4. Build your credit score
If you’re struggling to apply for a business loan, a business credit card can be a great way for you to build up your credit score. By consistently using the card for business expenses and making regular repayments, you’ll have no trouble with business credit in the future. However, all of this is dependent on your ability to manage your business finances responsibly.
5. Leverage on the introductory rates
In an effort to encourage new applicants, credit cards sometimes offer zero percent interest repayments for up to 12 months. This can essentially be used as a kind of zero interest loan that helps you get your business off the ground.
One way of taking advantage of this facility is by making large purchases at the start of the period and paying it off with zero percent interest. A word of warning though, you should not use this as a license to go overboard as you wouldn’t want to be stuck with a large debt and huge interest repayments.
Financing your business with credit cards may
sound risky and irresponsible at first. However, by taking the appropriate
precautions, you’ll be pleasantly surprised by the options and flexibility
available to you. Soon you will be saving enough money to wage on the
Kentucky Derby 2020 and who knows, maybe
you double your investment?