Business Credit Cards: Are They Worth It?

Nearly everyone has a credit card. However, the needs of businesses are a bit different.

While credit cards are common for individual purchases, commercial purchases can be much more expensive. In addition, businesses may have the ability to manage different kinds of repayment arrangements.

Business credit cards can be very valuable when a person needs funding for their organization but doesn’t know exactly how much they will need. These cards also pose less liability than some of the more common types of business loans.

How Are Business Credit Cards Different?

Business credit cards are different from traditional credit cards in the sense that they are geared towards professional organizations. With greater spending needs and often a better interest rate, these cards are designed to be used for large scale purchases like equipment, marketing efforts, land management, and more. Though not all business credit cards will have higher limits than regular cards, this is generally how they are structured.

Business credit cards are also different from traditional loans. Rather than taking out a large sum of money and paying interest on the entire amount, an owner can use their line of credit as necessary. This can be both quicker and more cost-efficient. It also allows a business to get funding without collateral.

Additional Benefits of Unsecured Business Credit

Since lines of credit like this are unsecured, it means that a person does not have to put up their assets as collateral. For a small startup business, this can be very lucrative. Many upstarts fail to get the funding they need since the owners are apprehensive about risking their assets. Business credit cards allow a person to get the funding they need without taking this risk.

According to Entrepreneur, over 70% of businesses get turned down for loans. However, credit cards are both faster and easier to manage than traditional loans. Business credit cards each come with their own terms and conditions. Finding the right option is important for managing repayment and getting the most out of all available perks.

Terms of Business Credit Cards

  • Credit Limits: Credit limits on business cards are usually higher than those on personal cards.
  • Interest Rates: Some cards offer lower rates to help promote long-term cost efficiency.
  • Bonuses: Some business credit cards offer money back after a period of time.

Business credit cards are a unique option for upstart organizations with financial needs and a lack of collateral. The flexible option makes it easy for growing companies to pay for expenses as they come and to keep their finances in order.