Small business credit card options have been one way that companies who are in need of business financing have used to invest in their organization with the hopes of growing more profitable and prosperous with these credit card purchases. However, there are some mixed feelings related to small business credit cards as there are pros and cons which business owners have been advised to explore before deciding what line of credit they choose.
Obviously, businesses who are able to gain access to credit through a small business credit card can make purchases to buy inventory, products, or supplies that will be needed to make their business more successful. Yet, many companies have also stated that a small business loan would be as helpful due to the fact that simple access to capital or credit is what many companies need to further their endeavors and, hopefully, hire more workers in the future.
However, as there are some indications that financial institutions are beginning to lighten up on their lending practices, there are those who feel small business credit cards need to be acquired with a bit of caution on the part of a business owner. Understandably, small business credit card options can offer rewards, perks, and again, provide access to capital that businesses simply need to either continue running or reinvest in themselves so that greater gains can be seen. However, many are concerned that credit card lenders who are having to adhere to new credit card rules may make up losses through business credit cards as these types of credit sources and do not fall under the protection of the CARD Act.
As an example, small business credit cards do not have limits on the amount of fees that may be charged, whereas personal credit cards cannot have more than a $25 fee levied against a cardholder who makes a late payment, but the restrictions and rules against sudden increases in interest rates do not apply to many small business credit cards, which could be problematic in some cases. While there are numerous financial institutions that do offer credit cards that will be helpful to businesses, and in many cases these banks are not looking to put undue stress on credit card used by small businesses, these are still issues that business owners need to be aware of before they select a small business credit card.
There have been some individuals who have used personal credit cards as a way to purchase for their business, but this again is something that financial advisers feel could be a bad idea simply because mixing business finances with one’s personal life could be problematic as failure to pay business expenses could lower one’s personal credit score and this will, obviously, lead to to problems in a business owner’s personal life. However, as more opportunities for small business borrowing and credit options are reportedly being made available, these companies do have the opportunity to find financing for their organization in the hopes of becoming more successful in the long run, but simply jumping at the first credit card offer or haphazardly acquiring a business loan is something that should be avoided as these companies and business owners should conduct proper research before choosing what line of credit will be best for their situation.