Education

Top reasons to apply for business credit cards

7 Apr 2022

Understand the benefits of getting a business credit card, such as streamlining your business spending or managing cash flow while earning rewards.

Business Credit Cards

As a small business owner, looking into business credit cards can be an excellent finance option. As a type of lending, credit cards can provide many benefits, most notably control and flexibility. Here we'll discuss several other reasons why integrating credit card spending into your business operations can be a prudent move towards developing sound economics.

What is a business credit card?

Business credit cards are designed to be used by a business rather than an individual and are available to all sizes, from sole traders to multinational corporations. Like personal credit cards, businesses can use their card to make purchases for goods and services, help build a credit profile, and manage employee spending and business expenses while also benefiting from perks and rewards, such as free employee cards and higher credit limits. 

An added benefit is that since business spending per client is greater than personal spending, credit card companies are always looking to onboard new, creditworthy customers.

Why should I get a business credit card?

Streamline business spending

Say your business makes a lot of monthly purchases, or you're forever reimbursing employees for expenses. A business credit card could be an intelligent way to manage the process. Rather than juggling multiple card payments or bank transfers, you could consolidate spending into a single monthly balance, dramatically reducing administration time and stress.

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Perks, rewards points and added protection

Similar to personal credit cards, business cards come with rewards, such as a low annual fee, cash back or loyalty points and can provide numerous travel and purchase protections. They can also include perks such as no fees on international transactions, business insurance on device protection, purchase security and trip cancellation. In turn, these can help keep your out-of-pocket expenses down.

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Admin and management tools

Many banks provide businesses with tools that allow you to review a year-end summary and export transactional data to reports providing an easy view of recurring transactions or a monthly, quarterly and year-end summary. Such reports can easily integrate with accounting software or be exported to Excel to simplify bookkeeping. This allows you to track spending and simplify your accounts, ready for tax and VAT reporting.

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Increase cash flow

Many businesses need to spend money to earn money, though this can be difficult to do without a steady cash flow

Credit cards can help your cash flow by giving your business the necessary injection of cash and the ability to make purchases that can help fulfil business goals. Without a credit card, you may not have the ready cash to afford such an investment.

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Finance working capital needs

Business credit cards can provide a line of credit as a boost to working capital. You can use this to purchase anything you may need for your business, such as:

  • Inventory: Whether it's physical inventory to drive sales, raw materials for production, or any other necessary product to run your business, a credit card can ensure you have what you need when you need it. Also, thanks to increased spending credit limits, a company can afford to buy in bulk, benefiting then from favourable supplier pricing.

  • Recurring expenses: Business expenditures are rarely the same every month, especially with companies that deal with seasonal fluctuations. However, all businesses need to deal with annual payments, such as taxes or insurance premiums, and credit cards can be an excellent way to cover business expenses.

  • Unforeseen expenses: It's always good to be prepared for any eventuality, and knowing you have a solid buffer to weather the storm can give you peace of mind. 

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Separate personal and business finances

As soon as your company has a business account, it's wise to apply for a dedicated business credit card as soon as possible.

  • Reduce personal liability: To run your limited company as a distinct entity, you must demonstrate that its finances are separate from your personal expenses.

  • Simplify accounting: Tracking business expenses is easier with a business credit card statement. This can also help you deduct and claim back business-related expenditures.

  • Business credit score: Building a solid business credit history reduces the pull of your personal credit rating for loans and vice versa. Should, for example, something damages your personal credit report, your company can still have the solid footing needed to request financing.

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Improve your business's credit rating

It can be challenging to secure financing without a credit history to look at, as banks aren't sure what to think and won't know if you'll be able to repay a loan or not. A business Credit Card allows your business to build a good credit score, which is beneficial and crucial for future growth.

A business credit card could make a huge difference. By regularly using the card and being punctual with payments, your company can begin to build a solid credit rating that grows over time. If you want to ensure your company will qualify for long-term loans, there's no better tool.

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Let us help you find the best financial product in the market. We will guide you through the whole process and make sure you get the best deal.

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Do I need a business credit card?

Whether to control spending, smooth out cash flow problems, reduce administration, or provide a straightforward method for employees to have an expenses account, a business credit card can be an invaluable resource. Check out our guide on how business credit cards work below.

Business Credit Cards

Are there downsides to business credit cards?

Credit cards can prove extremely valuable to your operation's smooth running if you settle your outstanding balance each month. However, the interest rate can be high, so you can quickly rack up expensive debts if you have a credit balance that rolls over and only make minimum payments each month.

Additionally, some of your suppliers might not take the card and can be wary that a business may dishonestly take advantage of the extra protection. 

The spending limit can also be low initially, meaning you might need to be selective about when and where you use it.

Can you get a business credit card if you have no or bad credit?

Yes, is the answer. Many credit cards are available for individuals with poor credit ratings, and the business world is similar. The limit you initially get can be pretty small. However, if you manage the facility carefully, the credit card could prove helpful when improving your score.

How to apply for a business credit card

When applying for a business or small business credit card, business owners are inclined to shop around for the best deals and fit for their business. At Funding Options, we can provide a solution relieving you of this time-consuming exercise. Through our application process, we do the heavy lifting for you. Click here to start the process.

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Editorial Team

Editorial Team

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