Small Business Credit Cards And Rates Business Owners May Receive–Are Cards More Affordable Than Small Business Loans?

Businesses that are looking for financing for a variety of reasons usually turn to small business loans as a way to gain the funding they need for certain purchases or for the advancement of their company, but arguments have been made that small business credit cards can bring not only affordable rates for business owners, but can be more affordable in certain instances for these businesses that are in need of the financing to make purchases, increase their inventory, or simply buy equipment that their office may require. Rates that are being reported on in May usually range from 13% to 22% or more, but these variable interest rates will differ depending on the business’s history, credit score, and their earnings.

Yet, one of the main benefits that small businesses see for small business credit cards at the present time is the fact that introductory rates on cards available to businesses in a good financial position can be quite low and many are advertising 0% interest on purchases until late 2011 or early 2012. Cards that are boasting such benefits usually catch the attention of a small business owner due to the fact that they feel they could do a great amount of purchasing at the present time and pay off these debts before this introductory period ends and a higher interest rate kicks in.

While this can be true if a card is properly used, there are certain fees that small businesses must look out for and requirements that must be met in certain cases. As an example, some cards may require that a business owner make a certain amount of purchases before a low introductory rate remains present, and if this is not done a rate a hike could occur as the introductory rate requirements would not have been met. If this occurs, businesses may be left paying on charges with a higher rate than previously thought, and this could be problematic if proper planning is not used.

However, one of the more common arguments for small business credit cards usually centers around the fact that businesses may not need a great deal of capital, which could be required if they are borrowing a loan, and as a result this could cause repayment costs to be more affordable. A business may borrow a sizable small business loan and end up repaying their debt for a longer period of time, while a business credit card could be used more periodically and, in some instances, lead to lower costs if a business owner properly budgets and repays these debts.

What it comes down to though is businesses must compare these credit card offers as rates will vary depending on the credit score and history of the business, as well as, how long a business may have been established. Companies that may have little record of their earnings or ability to repay may have to face higher rates or could be paying more on a card that offers a certain bonuses they simply do not need. While credit cards are not good for every business, companies that feel this could be a good investment, again, must heavily research all of the offers that are currently in place so that they will not only find the best card to meet their business’s needs but one that will be the most affordable.