I don’t think you’ll find anyone who would argue against the fact that small business is the heartbeat of the economy in the United States. More and more small businesses are being started than ever before and they all have the same needs; capital, and in particular, credit.
The main reason for all small business failures is a lack of capital and that’s why small business credit cards are so important. A credit card for a small business can even out those financial bumps in the road to success. Here are a few reasons why having a business credit card is so important.
1. Cash Flow
This is the number one reason a credit card can be so useful. Having to buy parts, supplies, or pay contractors, can be a big financial strain when you don’t get paid back for some time.
Here is how a small business credit card could help in this area. Let’s say that you own an upholstery business. You have to go out and purchase fabric and materials to complete the job for your customer. By using your credit card to pay for these supplies, you’ll be able to pay off the balance when you get the statement because your customer has paid their bill already.
The key is this situation is to have a business credit card with a substantial credit limit. What happens if it takes more than 30 days to collect your money from the customer? In this case you can get a credit card that offers a low interest rate so it won’t hurt you if it takes an extra month.
Being able to track expenses and maintain good, accurate records is vital to any small business. Credit card use can help in this area by providing you with a monthly statement showing all expenditures as well as helping to make tax preparation much easier.
Most small business credit cards will come with a fairly high credit limit, with some having no limits on them. How can this help you?
If your particular small business has certain times of the year when costs increase for whatever reason, then having the flexibility of a credit card to cover this short increase can be invaluable.
Even if your business is basically a cash only business, it can still be a good idea to have a business credit card for emergencies if nothing else. You’ll have the ability to cover the costs and you can pay it back over the course of a few months if you need to.
Having the right small business credit card can truly be the difference between success and failure. Take your time and find the best one for your needs.