Building a Small Business Foundation with a Credit CardMay 6, 2011 - 8:04 am
For many small businesses and entrepreneurial enterprises, it takes the strength of the owner’s credit profile to start building the financial foundation of the business. Using the owner’s past credit history and overall financial standing will eventually lead up to the other opportunities to let the business grow on its own. The business owner does have some obligation to set a separation goal – the point of time where business monies and personal monies are divided into separate entities. Getting to that point can prove difficult for some operations but the variety of credit cards for small businesses today have made things much easier.
Benefits of a Small Business Credit Card
It is likely your small business will first establish its credit foundation with a small business credit card. In decades past, credit cards did not necessarily cater to entrepreneurial types. Luckily, it is now more reasonable to expect great things from a small business credit card. The better news is that these card types keep evolving into better deals for small business owners.
Here are some of the other benefits of a small business credit card:
Cementing the Foundation
A small business credit card is likely the first anchor your business sinks into the sand. It’s not to say that any small business can get a credit card but banks are typically more flexible when it comes to approving a new business for a line of credit. Even with small credit limits, a small business credit card used wisely can certainly cement a company’s credit foundation. Using the card for six months to a year and paying balances faithfully each month can build up a nice line of credit, allowing for larger credit limits in the future.
Great Introductory Deals
Many credit cards designed for small businesses also come with introductory offers that make sense for a new startup. Discounts on office equipment and supplies or lower interest rates can make a big difference to an entrepreneur bootstrapping their own company. The money savings found in introductory offers can significantly impact the profit margins of company in its infancy.
Opening Doors for Growth
A credit card can give a business a credit profile that is necessary for growth. As a business expands, it is likely to need vendor supplies and services. Many vendors will require a credit check. With a credit card in good standing, businesses will likely be able to secure all necessary vendor agreements.
While business owners need to rely on personal credit initially for their small business pursuits, there needs to be an eventual separation between personal finances and business finances. A small business credit card can allow that to happen effectively. As the business grows profits and establishes its own credit, the business owner can relax the demand on the own personal finances.
Growth With the Business
Most small business credit cards are designed to growth with the business that uses them. With the large variety of available card promotions and incentives, entrepreneurs can find just the right card to grow with the business to provide efficiency, good credit standing, and continued incentives. Loyal card holders can often benefit from continued loyalty, especially the card companies that cater to the ongoing needs of a small business or entrepreneurial venture.