Over the past month small businesses have been asking for lines of credit in order to both grow their business and add to their workforce, but in some cases, lending has been tight when it comes to these companies. However, if a business has a poor credit score and a bad credit history of getting a line of credit can be even more difficult, so some small businesses turn to a secured business credit card in order to gain the access to credit they need and build a better credit history.
A business’s credit score is just as important as an individual’s, and there are various reasons that can cause this score to drop over time. However, if a business owner has gotten to the point where they can financially handle the obligations that come with rebuilding their credit history and score they may benefit from this type of secured credit card.
A secured credit card is no guarantee to a better credit history, but rather, is often used as a tool which businesses can take advantage of so they can buy on credit, promptly make payments on those charges, and over time rebuild a bad credit score. Yet, using a secured credit card for a business in this manner is usually something that will take disciplined financial habits on the part of the business owner.
While many small businesses, again, have sought out small business loans from the Small Business Administration, any business who simply needs to rebuild their credit score may be better suited to use a secured credit card. However, this type of card usually requires a deposit of a sum of money into a bank account which sets the credit limits and secures the card.
Any small business owner who may be considering a secured credit card will need to do their research and make sure that they find the card that is affordable and comes with an affordable interest-rate and minimal fees. Obtaining a card from a reputable lending institution will be in a business owner’s best interest, most of the time, so acquiring a secured credit card is not something that many business owners are advised to do hastily.