One of the easiest ways for a small business to use money it does not have is to choose a business credit card to use or its overdraft limit. You can get a card based on your score, history and personal credit score. Having a credit card is an important and popular factor among the creators of startups and small businesses.
Choose a credit card for the company or business
Even companies that are already established in the market find in credit cards a useful type of money for term, including for employees, business bank accounts can issue one for each of their key employees, facilitating the monitoring of expenses and monitoring of the company or personal budget.
Selecting the type of credit card that is right for your business or business is important for business, but choosing the wrong one can make you lose a great deal of money with fees, penalties and fees. Here are some key points you need to know when choosing a credit card for your business :
1. Give personal guarantee
It is practically impossible to depart from the requirement to issue a personal guarantee to obtain a commercial credit card. If your company is structured as a micro-business or a limited liability company, you are personally responsible for the charges incurred on the credit card issued to your business .
If your company is incorporated, the bank will probably insist that each member with more than 25% stake in the company signs a personal guarantee. With that, if your business does not go well (go bankrupt), you will not get out of debt. In this case the personal guarantee you have signed may be invoked by the bank. Each bank has its criteria.
2. Do you need a credit or debit card?
There are significant differences between the two card types. A credit card requires you to pay the outstanding amount at the end of each billing cycle. These have high limits and are an ideal fit in finances if you want to use them to pay business expenses on an average of 30 to 45 days.
On the other hand, if you are not sure if you will have the money to pay off the full credit card bill, it is better to opt for a debit card. If you have overdraft limit, you can roll the due amount up to the last day of the free interest period. Of course, you’ll have to pay interest if it’s past due date.
3. Check the financial implications
Before choosing a credit card, compare the monthly and annual percentage rate (CET) charged on unpaid balances. Any difference of up to 50% less than the percentage am, can be quite important if you plan to use the credit facilities on your card ostensibly.
It is helpful to keep in mind that your business credit card may have an interest rate that does not affect your pocket if you can not pay the full invoice. On the other hand, it is not reassuring to know that the card has a high interest rate that can multiply the balance if there are problems paying the bill.
One more detail, some cards charge membership fees (no annuity or annuity) while others do not. In many cases, credit cards that require a membership fee to be paid have benefits that exceed the rates applied and at the tip of the pencil may be worth it. Do not reject cards that have annuity rates before you examine all of their advantages.
4. Use the card very carefully.
The usefulness of a credit card for a small business is enormous. But you need to understand the terms and conditions that you will be subject to when using the financial service.
If you lose control of your expenses or get stuck in a situation where you have an ever-increasing balance at the end of the month, this could threaten the very survival of your business and your business. Be Careful When Choosing a Credit Card for Your Business