Some small businesses are still looking for financing as areas like small business credit cards and loans have, for some, offered the opportunities for growth, the purchasing of inventory, advertising, or aid when it comes to paying for other daily expenses that may contribute to the success of the business over the long run, but some companies are seeing small business loans as less ideal and may be opting for small business credit cards as a way to help their company’s financing needs. While there are a variety of banks that are continuing to pursue credit card users, some businesses are being cautioned against simply jumping into a credit card agreement as a financing for businesses, as of late, has come from different sources that range from small business loans and credit cards to even angel investors.
However, we are currently seeing small business cards average at rates of around 13% to 19% or higher here at the end of October, but this is not necessarily going to benefit every small business owner in terms of their financing needs. Currently, cards that are being advertised specifically to small businesses are usually highlighting benefits that may come through cash back rewards, cards that may be offered for employees, and there are also perks like airline travel miles and points that can be beneficial for specific business owners, yet business advisers are pointing out that there may be some benefits to these cards but the pros may indeed outweigh the cons for some companies.
Obviously, a business owner needs to understand why they want financing, more specifically they may need to understand why financing will be beneficial for their growth, as some companies may simply be able to use a credit card or a small business loan to purchase more inventory than they would have without these forms of financing, and this can lead to higher sales and profits. Yet if a company is looking to make big purchases on a credit card, as an example, carry a balance, and attempt to pay off this charge overtime, factors like interest rates need to be considered and, in some cases, businesses may want to look at both credit cards and loans to see where a more affordable rate may be offered, as interest charges on these long-term debt repayment obligations could get costly.
Furthermore, business owners need to understand that protections that are offered to consumers through the CARD Act did not apply to small business credit cards so there are more fees and possible rate increases that could come along with a business card, but this is where research into the types of cards had been beneficial as some may offer more perks and benefits than a business owner needs, which may translate to more costs. However, these cards are obviously a more long-term financing option, but as we see offers continuing to be made in the hopes that businesses can use these cards for a variety of financing needs, businesses continue to weigh the options available as their need for financing and reasons behind seeking out a credit card or loan will play into what financing option will be best for those currently seeking help for their business.