Apply for a Credit Card to Jumpstart Your Business

When you are starting a business, you may need to bootstrap the business finances during the initial start-up phase. Small business owners often have to rely on their personal finances to keep moving forward but at some point they also need to make a complete transfer from personal to business to establish business credit. The fastest way to jumpstart your business’s credit foundation is to apply for a credit card for business purposes.

Benefits of Business Credit

Much like personal credit histories are established by applying for and using credit, business credit foundations are set up to support the future of a business. Credit checks are often done by vendors and other businesses that associate with the company. For this reason, a business needs to have an excellent credit foundation in order to experience growth and ultimately success.

The early days of a small business rely on the owner’s credit background but once established, the business credit foundation will continue to support growth and more opportunities. Just like personal credit a business’s credit can get ruined by late payments, missed payments, and the overextension of credit.

Advantages of a Business Credit Card

An ideal way to start a business credit foundation off on the right foot is to apply for a business credit card. Unlike the years past, business credit cards are now being created to cater to small business needs. Many offer incentives like discounts on office supplies or even cash back rewards for purchases made. Using the right small business credit card can help you establish good credit and expand your abilities to get better credit.

Many small businesses will start off with small credit limits but with proper use and on-time payment, the amount of credit allowed can be increased. Eventually, your business will have the access to the purchase power they need to buy equipment, expand operations, or procure inventory. This is the first opportunity to establish a solid financial foundation for a small business. Once a credit card is used wisely for a business over a period of time, it can lead to the availability of other credit opportunities such as business loans that are needed for growth.

In addition to being a springboard for better business credit, using a business credit card will help you with your accounting requirements and make tax time much easier to survive. By categorizing your purchases each month, you will have accurate records of business expenses and deductions to report to the IRS.

When to Apply

Applying for business credit cards should not be done during the first few months of business. It takes time for a business to separate finances from the owner and develop its own financial standing. After the first 6-12 months, small business owners can look into the different cards being offered to small businesses. After the first year of business, the owner will have a better idea of whether or not the business will be profitable or if things will not work out.

Once you have been approved for the right business credit card, use it wisely and pay off the full balance each month to save on interest charges. Never utilize the credit card as an extension of the business profits or you can drive your business into a heavy load of debt. As time goes on, you can request an increase in the line of credit necessary for your business. The business credit profile will be strengthened during the first year and more opportunities will likely be available to a small business with a great credit profile.