Mon 10 Aug 2009
Like any other facet of small business, there are multiple options when it comes to financing and lines of credit. Financial institutions are gradually becoming more and more conservative when offering lending options to small businesses.
More often than not, business owners are turning to credit cards as an option to fund their ventures. They do this through the use of personal credit cards, as well as cards in the name of the business. However, all credit cards are not created equal. The following elements are important to consider when looking for the right business credit card:
Interest Rates. The interest rate is perhaps the number one factor to consider when selecting a business credit card. Be careful about advertised specials that offer a "low introductory rate" that will change within a specified period of time. In addition, you may be able to secure a better interest rate by performing some research and comparison shopping. The recent economic downturn has credit card companies on their toes and a business owner may be able to negotiate a very attractive rate, as long as their credit history is solid.
Annual Fees. Certain types of credit cards require businesses to pay an annual fee. This fee will vary depending on the card and the terms. It is reasonable to expect a fee from $25-$150. An annual fee shouldn't be an automatic disqualifier when choosing a business credit card. Some cards with annual fees also feature attractive reward programs and special perks that make it worth the extra money. Weigh the cost of the fee against other incentives that a credit card may extend to small businesses. If the business has a long history of excellence when it comes to credit, the perks and incentives may outweigh the cost of an annual fee by a significant margin.
Reward Programs. Depending on the nature of the business, certain credit cards offer reward programs that can add significant value to small business operations. For example, if a business spends a great deal on fuel expenses, a card with a built-in cash back reward system for fuel purchases is an excellent option. The better credit history that a business has, the better the rewards that it can reap.
In summary, choosing the right business credit card is a process that requires deliberation and strategic planning. Don't settle for anything less than the best option for your small business.