One of the most important money management decisions a business owner must make is whether to apply for a business credit card. Many small business owners are constantly inundated with credit card offers, and it is sometimes difficult to understand the difference between credit cards and other credit options.
A business credit card offers business owners a revolving line of credit that is capped at a certain credit limit. Understanding the pros and cons of using a credit card can help you decide if applying for a credit card is the right decision for your business.
A primary advantage of obtaining a business credit card is that it is a convenient financing option. A business owner has easy access to funds to make necessary purchases and take out cash advances. Another advantage of a business credit card is that the approval process is much easier than applying for some other forms of credit.
Some business credit card lenders do not require a business owner to possess an established credit history. Credit cards can also serve as necessary funds for emergency situations. For example, if your business is experiencing a difficult time securing payments from your customers who paid on credit, a credit card can provide you with the cash needed to operate your business until the accounts are paid.
Although business credit cards offer many benefits, several risks also exist. A disadvantage of owning a credit card is that the business owner is usually personally liable for the debt. Personal liability can be avoided with certain business structures, such as a corporation. Another disadvantage is that the interest rates on a business credit card may fluctuate depending on the policy of the credit card lender. If you make any late payments or exceed your credit limit, your personal credit score is affected in a negative manner.
Business credit cards are a popular option for many business owners. Performing proper research and understanding a lender’s policy is one way to ensure that you choose a credit card that will benefit your business.
For more information, go to Business Credit Card at http://www.unsecuredbizloan.com/business-credit-card