5 Benefits of a Business Credit Card

Small businessmen and entrepreneurs very often have to rely on their business credit cards for debt financing. It can allow them to take care of their working capital needs to afford supplies, payments to employees and vendors in times of financial crunch. Besides, the smart use of credit cards can earn them various rewards.

Here’s a list of five major benefits of adopting a business credit card you must know about:

1.    Higher Credit Limit

The most obvious difference between a normal credit card and a business credit card is that the latter comes with a much higher credit limit providing you with much more freedom which is very crucial for people trying to set up or run a business. Therefore, the importance of having a business credit card can’t be stressed enough as it allows much smoother liquidity management which is key to any organisation.

2.    Gain Better Rewards and Other Perks

Such cards also offer more opportunities to earn rewards, cash-backs, and other perks. For instance, using your business card frequently can help you earn flying points and hotel stays resulting in saving travel expenses. They also offer cash-backs on shopping, fuel refills, and dining.

3.    Better Terms

Another upside of having a business credit card is that you are offered much better terms compared to personal card terms. These cards charge comparatively lower interests, provide discounts on early payments and longer interest-free repayment periods. Overall, they can help a small business make proper use of debt financing.

4.    Better Opportunity to Boost Your Credit Score

Owning a small business credit card and using it frequently for various related expenditures can help companies build good credit history. Although to achieve this, they must pay off the balances on time. When you have a great credit score as a business, it enables you to get approval for other forms of debt financing, such as business loans at lower interest rates, or mortgage financing. It also provides you more negotiation power in availing of loan terms and collateral requirements. A good credit score is crucial when you are seeking credit syndication. Different lenders will assess your businesses’ creditworthiness based on it.

5.    Better Classification of Personal and Business Expenses

Mixing up your personal and business expenses can be one of the biggest mistakes when setting up a company. Many entrepreneurs and small businessmen fail to separate their business expenses from personal ones by mistakenly using their cards to buy equipment, other supplies and later end up paying a high price for their mistake. Since these cards are meant to support enterprises and also offer low-interest rates, you must remember to do your business expenditure with a business card only.

The bottom line is that a business credit card has a specific role and should not be confused with a personal credit card. Also, every growing enterprise needs good cash flow and flexibility,  which becomes possible with a business credit card.