Should Small Businesses use Credit Cards?

Business owners and consumers have mixed views about the use of credit cards as consumers end up with failed financial strategies, buying unnecessary things, and other debt-related problems. The obvious cons of using a credit card may scare small businesses, but there are countless benefits that support the use of small business credit cards. The strategic use of a credit card will allow you to manage your personal expenses from business needs. The aim of this article is to clear the doubts and questions that you have in mind about the use of small business credit cards. We are going to discuss everything that may interest small business owners.

What is a Small Business Credit Card?

If you are already aware of the consumer card, understating the basics of small business credit cards is pretty simple. You can only use a small business credit card for business expenses and purchases. Some owners utilize other finance options like a merchant cash advance to grow their business, while some rely on the small business credit card. While choosing the appropriate service provider, always go for the small business credit card issuer that allows you to earn rewards as a result of large purchases and offer incentives that can help your business to grow.

Like a consumer card, the small business credit card is also restricted by credit limit and interest charge. There are many other downsides to using credit cards for your small business. If you are not sure about credit cards, give merchant cash advance a try to support your business expenses.

Benefits of using Small Business Credit Card

With finance options like merchant cash advance and loans, some business owners still prefer credit cards due to flexible interest ratios. You can pay as per your ease, and in case of market upcoming, you can also repay large purchases in smaller installments. Here are some other benefits of a small business credit card over other types of loans:

1.    Simplify Cash Flow

From business equipment to product supplies, you can use the credit line to finance your business operations. If you don’t have a small business credit card, you may not have such kind cash at hand for these large purchases. If you don’t have money to spend on business, go for a small business credit card.

2.    Streamlined Employee Expenses

You cannot let your employees make business purchases on your personal card. Doing this will sabotage your personal budget. With a small business credit card, your employees can pay for business items, and you will receive the bill for all the payments made by the employees. Some issuers also offer employee cards, and that’s even better.

3.    Earn Rewards

Reward programs are the biggest perk of using a small business credit card as you are offered credit points or cashback facilities. Every purchase makes with a small business credit card will earn you some reward points that can benefit your business. These reward points can be redeemed in different ways depending upon the issuer’s program.

1.    Receive Purchase Protections

Like any other personal credit card, you get to enjoy different purchase and travel protections. From auto rental damage to trip cancellation, you will benefit from these protections at different points. Using the merchant cash advance option has its own pros and cons, and it’s more effective if you need immediate payments. A small business credit card can benefit your business in the long run.

2.    Utilize Account Management Tools

Summaries and billing insights can be really helpful for SMEs to control and plan their budgets in a better way. You can easily track your spending on business items and modify your future expenses accordingly. Year-end summaries are really useful when you need to simplify the cash inflow and outflow.

When you should not use a small business credit card

There are countless other benefits of using a small business credit card, but there are some cons too. Investing in a small business credit card at the very start of the new business may not be the best idea. You may not be able to afford high-interest rates, and you can consider other options like merchant cash advance at the start of your business venture. If you end up making several purchases at once and fail to repay as per plan, you may get in financial trouble.

Before using a small business credit card, invest some time in knowing about the pros and cons of this option. If you are not sure about the success and revenue generation capabilities of your business, reconsider your thoughts about small business credit cards.

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