{"id":2680,"date":"2020-03-22T16:42:11","date_gmt":"2020-03-22T16:42:11","guid":{"rendered":"http:\/\/localhost\/2020\/swoopMW20\/?post_type=knowledge-hub&p=2680"},"modified":"2024-08-22T18:38:50","modified_gmt":"2024-08-22T18:38:50","slug":"business-credit-card","status":"publish","type":"knowledge-hub","link":"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/business-credit-card\/","title":{"rendered":"Business credit cards"},"content":{"rendered":"\n
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\n \n What is a business credit card? <\/a>\n <\/h5>\n <\/div>\n\n
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Business credit cards, also known as corporate credit cards, work in the same way as personal credit cards. They come with a set credit limit and you can roll over your balance from month to month, though your spending will accrue interest, based on the APR for which you qualified.<\/em><\/p>\n

A business credit card is a simple way of gaining access to working capital, allowing you to improve your company\u2019s cash flow during slower periods or free up cash to fund the expansion of your business.<\/em><\/p>\n

Most business credit cards have an interest-free period of up to three months \u2013 any money borrowed that is paid off before this point does not accrue interest, making this an inexpensive option if you\u2019re able to reliably pay off your debts. Your credit limit is applied on a rolling basis, so once any debt has been paid, you can begin borrowing up to the credit limit again.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Why choose a business credit card? <\/a>\n <\/h5>\n <\/div>\n\n
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Perhaps you\u2019re a small business owner who\u2019s found it difficult to get a traditional business loan<\/a>. You can of course hit up your network of deep-pocketed friends\u2026 but if they aren\u2019t forthcoming, a business credit card can be a good option. Like a revolving credit line<\/a>, a business credit card can be your emergency lending, up to a limit. This limit will depend on your credit rating, trading history, revenue, and profit.<\/p>\n

A business credit card is a useful way to manage cash flow when you don\u2019t have enough working capital. It\u2019s also useful for keeping track of the expenses your staff might incur (several cards can be used on the same account though the credit limit will remain the same).<\/p>\n

Once you\u2019ve set up your credit card, you can improve your business credit rating by observing the credit limit and paying back the balance each month and on time.<\/p>\n

Otherwise, you can roll over your balance from month to month, paying only the minimum amount required (if there is a minimum), and accruing interest based on the effective APR for which you qualified.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Is it suitable for an SME? <\/a>\n <\/h5>\n <\/div>\n\n
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If you run a small company, a business credit card is a simple and flexible way of managing your expenses and ensuring you always have access to working capital.<\/p>\n

However, the relatively low credit limits and high interest payments mean that other financing options may be more attractive. Merchant cash advances, for example, offer lump sums repayable via a percentage of your card takings \u2013 so if your takings drop, your repayment rate will drop too, ensuring repayments don\u2019t eat into your profits.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Pros and cons of a business credit card <\/a>\n <\/h5>\n <\/div>\n\n
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Unlike bank loans or credit lines, application for a business credit card is fairly simple \u2013 if you have a good credit history and you have established a successful business, you should not find it difficult to qualify. This is of particular benefit to smaller businesses, as they are more likely to experience cash flow issues \u2013 and a business credit card offers instant access to extra funds that can be used to purchase stock or equipment, ensuring your business remains profitable.<\/p>\n

An additional benefit of a business credit card is that it allows you to build up your business credit \u2013 if a lender sees that you reliably pay off your business credit card, they will be more inclined to approve you for a bank loan or an increased credit limit in the future. Some lenders even offer perks such as air miles and cashback offers and, because business credit cards are unsecured, there is no risk to your home in the event that you are unable to pay back your debts.<\/p>\n

As with all financing options, however, it is important to be aware of the potential drawbacks. Interest rates on business credit cards tend to be higher than other forms of working capital finance and, along with the annual fee for owning the credit card and fees for late repayments, can prove an expensive option.<\/p>\n

The amount you can borrow via a business credit card is also likely to be lower than other financing options, so if you require a lump sum to cover a one-off payment or investment, you may wish to consider other working capital finance possibilities.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Have you also considered? <\/a>\n <\/h5>\n <\/div>\n\n
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You might also want to consider other types of working capital finance<\/a>.<\/p>\n

Within these different types of business loans \u2013 of course, there is some overlap between them \u2013 you\u2019ll find some that better suit your particular situation, e.g., you might be looking for startup finance, equipment finance, or working capital finance<\/a>.<\/p>\n

Depending on how long you think you\u2019d take to repay the loan, you can consider:<\/p>\n