Why Credit Cards Should Be Your First Choice of Payment When Running a Business

Once a business is up and running, it is much easier for it to be approved for a business line of credit, compared to the process of getting a personal line of credit. According to reports, approximately 65% of SMBs utilize credit cards, and this number is increasing all the time. By using business credit facilities, a small business owner can preserve cash reserves, while acquiring the necessary supplies, equipment, office space and other assets to run the business optimally.

Business credit card

A caveat is in order: personal credit cards and business credit cards should be separated at all times. The difference between personal and business credit cards is stark. The former is for personal use, and the latter is expressly designed for expenses related to the business. It should be remembered that the business owner may be required to sign surety in his or her personal capacity for any debts or defaults incurred on the business credit card.

Multiple Benefits of Using Business Credit Cards

Businesses that have been approved for business credit cards are at a distinct advantage. Every time the business credit card is used it promotes the business to clients, lenders, and suppliers. Furthermore, business credit cards are typically associated with significantly higher credit limits. For example, a typical business credit card could have a limit of $50,000 attached to it, while a personal credit card could be anywhere from $3,000–$15,000 on average. This means it is much easier to purchase high ticket items such as vehicles, machinery, equipment, property, etc. with business credit.

Of course, business credit cards do not typically affect the personal credit score of the business owner. When an SMB maintains open lines of credit vis-à-vis business credit cards, there are separate transactions and statements for small businesses operations. This makes it much easier to divide personal expenses from business expenses.

In terms of business credit ratings, a well-maintained, scheduled payment plan for business credit card expenses bodes well for credit rating increases. Every business seeks to be as highly regarded as possible, given the judgements of the Better Business Bureau (BBB), buyers, sellers, clients, and the business community in general. The major credit reporting agencies such as TransUnion, Equifax and Experian will boost the business’s credit rating when it makes timely payments and manages its business credit facilities well.

Benefits of Using Credit Cards for Canadian Business Owners

A good example of demand going wild for business credit cards is observed in the Great White North. Fortunately, Canadian businesses have a wide variety of credit card providers available. For example, these business credit cards from Canada cater to small, medium, and large businesses across the board. The benefits accrue, regardless of the industry or type of business being run. Multiple options abound, including the prestigious American Express Business Card which has received acclaim from business owners throughout maple country.

Cards like the aforementioned AMEX business card do not charge an annual fee, and there is a 30,000 point welcome bonus. These points can be used for the purposes of paying business expenses. Travel insurance and associated benefits are also available. Many small and medium businesses are heavily reliant on company employees/owners traveling extensively to make new contacts and drum up more business. That’s why many businesses are smart to consider business credit cards that offer travel perks.

Business Credit Cards Can Result in Better Money Management

A business credit card allows company owners to better manage the expenses of their employees. For example, key employees and personnel can have set limits on company credit cards. Plus, there are many perks associated with using business credit cards, such as discounts on business-related travel expenses, business purchases, business supply outlets, and similar expenses. It is vital that the company maintains checks and balances on all business credit cards, to ensure that that spending is within the agreed upon range and that prompt payments are made when due.

Businesses can also benefit from avoiding cash advances on business credit cards, since these are typically associated with ATM fees, higher interest, and greater costs. The most popular business credit card options for Canadian businesses are offered via MasterCard, Visa, and American Express, although many other suppliers are also worth considering. There are a myriad of benefits, rewards and savings associated with different types of business credit cards. These include office supplies, WiFi, telephone bills, and big-ticket purchases.


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