Useful Tips for Small Businesses on Usage of Business Credit Cards

Another large credit card company this week launched a business credit card to specifically meet the needs of small business owners. This launch is yet more proof of how fast the small business segment is growing and contributing to the U.S. economy.

According to Ruth Davis, Vice President, D&B Small Business Credit Products, “The small business segment is still underserved and many small business owners continue using their personal cards for business expenses instead of business credit cards. They are still unaware of how critical building and managing their business credit is to the success of their businesses.”

For small businesses and entrepreneurs, D&B Small Business Group recommends that:

Small businesses should use a business credit card over a personal credit card. They should establish a credit history for their businesses by doing business – purchasing goods and services, writing checks, paying employees and vendors and borrowing money – in their business’s name, not their personal names. And, of course, make sure that the business pays its bills on time.

Small business owners should understand how credit card interest rates are established. Many banks establish interest rates through an automated decision process, especially for smaller accounts. Small businesses should ask if their bank takes into account their personal information and good credit history, or what else they can do over time to lower their interest rate. Business credit history has a significant bearing on the interest rates small businesses get on their business credit cards. For businesses with poor credit ratings, top national banks increase credit card interest rates on average from 9% to 18% and loan interest rates on average from 8% to 12%.

Even if small businesses don’t have an immediate need to pay on credit, it is a good idea to have a credit card, for a couple of reasons:
Using it and paying it on time builds up their good credit history, just like with a personal card.

Most small businesses have cash flow challenges, and a credit card can help them bridge this gap if and when the need arises.

Thanks to D&B for this timely article. Learn more at D&B


1 Comments Useful Tips for Small Businesses on Usage of Business Credit Cards

  1. Robert Levin

    These days many banks are now offering credit lines based on your personal credit score (similar to the approval process with credit cards). The interest rates are often lower than with cards. As stated in the article, it is always a good idea to have a credit line – never know when you will need it.

    RL – NYER


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