Small business credit card options have been an alternative to traditional bank loans for many business owners who simply need an access to credit so that they can make purchases to keep their company going forward, like buying inventory or as a way to help establish a new office with the purchase of certain types of equipment, but there are some concerns that small businesses may not be turning to business credit cards as frequently as they have in the past. Reports have stated that small business credit cards were once the more common source of financing that small businesses used to help their company, but there have been certain issues that may have led to some businesses simply seeking out a loan or outside investments.
While there are opportunities for businesses to acquire a small business credit card, which could offer rewards specifically helpful for their particular business or future aspirations, like travel reward points, there are also indications that more banks may be attempting to get consumers and businesses back into the credit card area of financing. Various credit card sources list numerous types of cards that may be available for small businesses, and on average many rates vary from 13.24% to 22.99% or higher, but there are still advisers who want businesses to carefully explore options they may have when it comes to small business credit, as there may be some drawbacks to new credit card availability.
Some small business credit cards have offered balance transfer options, and award points, or even discounts on air travel, but business owners must be careful about practices that many fear banks may implement thanks to restrictions from the CARD Act. The new CARD Act only applies to consumers and may allow for lenders to suddenly increase rates or charge fees even if a business cardholder makes prompt payments on time. According to an article on Money-Rates.com, some analysts feel that since the CARD Act restricts certain practices on consumer credit cards, the lack of restraints on business cards may make them, “…a prime target for credit card companies looking to increase their revenue.”
Understandably, there are some businesses who could benefit from new credit card offers that may be arising from the industry, but simply choosing a card that is seemingly in a business owner’s best interest could pose problems as higher costs may be associated with rewards that a business owner does not need, a higher interest rate may come after a low introductory period been offered, and again, sudden increases in rates or fees are not prevented on these business cards. However, these concerns by analysts do not necessarily point to the fact that small businesses are going to have to carry an extra burden, but simply put, businesses who may be in need of financing and are looking for alternatives to a traditional bank loan can benefit from a business credit card, but exploring not only offers that are currently available but costs that may be incurred at a later date must be practiced so business owners can avoid putting themselves in a situation where they are paying unneeded costs to use a business line of credit.