For those who are looking for a way to fund their business, business credit cards could provide the solution that you’re seeking. Unlike a personal credit card, this is a type of card that’s specifically for business use only. It doesn’t cover anything that can be deemed as personal use.
It doesn’t matter how small or big your business is, there’s a card for every type. Keep in mind that you will most likely have to have good credit personally as it’s common for lenders to look into this as a deciding factor before providing your business with their stamp of approval.
How Business Credit Cards Work
When it comes to functionality, it works just the same as a credit card that you would get for personal use. The financial institutions that back them will provide you with perks and rewards just like personal credit cards too.
However, this doesn’t mean that you can go out and buy new furniture for your home with it as this would be against the terms and conditions set forth by your lender. However, you can still use it for Point of Sale purchases, online purchases, and much more as long as the expense is truly for your business itself.
You can either use your EIN (Employer Identification Number) or your personal social security number when applying for a business credit card. If you want to maximize the benefits of using it to build a credit score for your company, it’d be wiser to go ahead and use your EIN to ensure that the report to credit bureaus will be for the company itself.
How can a business credit card benefit you?
Many might think that only being able to use this type of card for business expenses is a limitation, but the benefits that it can provide to you and your organization can unlock a bright future. See for yourself.
· Access to cashflow could streamline business operations.
Sometimes the growth of a business is limited due to its cash flow, but a business credit card can lift this limitation for your business. Not only will it provide you with the funds that you need to fund daily operations, but it can also open the door to making large purchases as well.
· Business-specific rewards are usually provided.
It’s not uncommon for a business credit card to provide you and your company with free access to software as well as other rewards that are business-focused. If you want to be rewarded in a way that will help you benefit your company, this is the way to do so.
· Make it easier to obtain business loans in the future.
Since lenders report your account(s) to the credit bureaus, you’ll be improving the credit score of your business. Credit cards are easier to get, but you can use this as leverage to get approval in the long run on bank loans as well.
This is especially great for small businesses, as it does provide a line of credit to fund the day-to-day operations as well as the future. Just like with a personal credit card, staying on top of payments and using it wisely is the only way to truly ensure that it’s beneficial for your company.