Small Business Financing With Credit Cards–More Business Credit May Now Be Available But Do They Offer Advantages?

As more offers for credit cards to a variety of consumers and businesses are becoming available, there are some small businesses who are considering a small business credit card as an alternative to financing options from small business loans, as an example, so that these individuals can use revolving credit to reinvest in their business, purchase supplies, and simply use their card as an asset to keep their company’s finances moving forward, with smart credit purchases for their company. However, as numerous offers for a variety of cards are bringing different rates and rewards, there are advisors who have cautioned businesses to look at the fine print of fees options for a small business lines of credit to make sure that they are choosing a card that will be in their company’s best financial interest.

Obviously, the majority of business owners who acquire a small business credit card will look for an option that will be affordable and may offer options like rewards or airline points, if a business owner often travels, but there are some differences that advisors are making business owners aware of, especially those who may be new to the small business credit card game. Recent regulations for personal credit has arguably made consumer credit card problems less severe as sudden increases in interest rates have been forbidden, more transparency in the totality of a consumer’s debt has been made available, and for individuals that keep a positive credit history, required reviews have led to some to see a reduction in their interest rate.

However, these protections from the CARD Act do not apply to small business credit cards and, as a result, some business credit cards could come with sudden increases in interest rates, or in some cases, excessive fees or additional costs may be levied against these business cardholders if they are not careful about the card and lender they choose. Many advisers often point out that the promotions and advertisements by many lenders need to be more closely explored by cardholders due to the fact that they may not be as beneficial as they sound. One example of these advertisements that may draw in new business credit card seekers is either rewards and low interest rates, but business owners must remember that they are not guaranteed the lowest promotional rate and even if, for example, a 0% interest rate or low introductory offer is made, once this period ends a business owner may see a big increase in their credit card rate.

While there are some financial institutions that may offer protection, similar to those from the CARD Act to small business credit cards, companies who are considering a small business credit card or taking advantage of offers they may have seen must make sure that they research not only what rates they will may get, any drawbacks the card may have, and the potential for rate increases in the future, but simply looking at how a particular card may benefit one’s company will be helpful when choosing the right card, if business owner is considering this form of credit to help finance their business. It goes without saying, certain companies may benefit from a business credit card while others may not be in the position where they are helpful, but even a business that can use a card to further their company must wade through the types and rewards associated with each card to find one that meets their particular needs.