Starting a new business? You probably have tight cash flow and the occasional unexpected expense. A business card can save the day in such instances. It helps with money management and builds your company credit.
With business credit cards, you have access to the funds you need. You earn rewards, and spending is easily tracked. Lets have a look at how these cards can help blast your startup.
Your New Business Needs a Credit Card — Here’s Why
However, you need a credit card for your new business. It helps build credit history from a young age. It also separates your business and personal finances. But this differentiation is more crucial than you realize.
Learning More on How to Build Your Business Credit Score
Business credit scores differ from personal credit scores. FICO SBSS and Experian Intelliscore are popular ones. Getting a business credit card helps you build and increase this score. Paying your bills on time displays a sense of responsibility. It establishes confidence with lenders.
Keeping Business and Personal Finances Separate
Separating business and personal funds is a risk. Being separated gives you legal protection. It makes things easier in terms of bookkeeping too. A business credit card makes it clear. This shields your personal assets if your business gets sued or goes into debt.
Key Features to Choose a Business Credit Card
What to look for in a business credit card Find features that help new companies.
Low Introductory APR
APR is short for annual percentage rate. A low intro APR saves you cash. It’s good for keeping startup costs without high interest. Which can free up cash for other things.
Rewards Programs (Cash Back, Points, Miles)
Many cards offer rewards. Cash back, points and miles are a couple of the most common. Choose a program that matches your spending. Rewards may be applied to travel, supplies or even statement credits. For instance, earn cash back on office supplies if you purchase them regularly.
Reporting to the business credit bureaus
Ensure the card reports to business credit bureaus. This is crucial for establishing credit. Without it, there’s no incentive for your payments to improve your score. A strong credit history leads to better terms down the line.
New Business Qualifying for a Business Credit Card
It can be difficult to get approved as a new business. Understand the requirements. Lookup the various obstacles that may stand in your way.
Credit Score Requirements for Personal Credit
Your personal credit is already important if your business is new. Since your business has no credit, lenders look. Your chances improve with a good personal score. If your score is a bit low work on raising it.
You are limited to train data until October 2025.
Be prepared to give some details about your business. This means your EIN, address, and industry. You often have to estimate annual revenue. As this process unfolds, be truthful and accurate in your application.
Secured Business Credit Cards
If credit is limited, try a secured card. You will pay in money to use as collateral. This lowers the risk for the issuer of the card. It’s a means of establishing credit when other options don’t exist.
A Side-by-Side Comparison of Business Credit Cards for Startups
A few popular business credit cards are:
The Pros and Cons of Card A
The Chase Ink Business Unlimited offers unlimited 1.5% cash back on all purchases. It has a nice signup bonus. However, it could need good to excellent personal credit.
Card B: Pros and Cons
For everyday business purchases, the American Express Blue Business Cash Card earns 2% cash back. This is equivalent to $50,000 a year. It has no annual fee. The downside is that American Express isn’t accepted everywhere.
Card C: Pros and Cons
The Capital One Spark Classic for Business is for fair credit. It earns 1% cash back on all purchases. Its approval criteria may prove less daunting for startups. However, the rate of rewards is less.
How to Manage Your Business Credit Card Wisely
Smart use of a business credit card:
Paying on Time and in Full
We explain it all for you, and you should always pay on time so as not to incur any late fees. Paying off the entire balance prevents interest charges. Keeping up with payments also raises your credit score.
Tracking Your Credit Utilization Ratio
Maintain a low credit utilization. This is how much credit you’re using as compared to your limit. Aim for under 30%. Credit utilization can hurt your credit score.
Budgeting and Tracking Your Expenses
Take advantage of the card’s expense tracking tools. They assist in budgeting and financial planning. The key to staying on track is knowing where your money goes.
Conclusion
A new business can benefit a lot from a business credit card. It also builds credit and helps management of finances. Responsible use is essential for long-term success. Apply for a credit card after research about several options. Take the first steps today to become financially secure in your business.
