Practical Reasons to Get a Business Credit Card

Whether you are contemplating starting a new venture or have an established one, business credit cards can prove to be a valuable tool in accessing capital for your business and managing the cash flow. They can be useful in a financial pinch when there is not enough cash available to make payments or cover unexpected expenses. So what are some other practical reasons and benefits of getting a business credit card? Let’s find out.

Reasons to get a business credit card

Provides Instant Funding

Being a business owner entails a myriad of financial transactions, a lot of which may require more cash than you already have. Business credit cards provide a source of instant, short term financing to handle your expenses. Small businesses usually operate with low budgets and often find themselves in a tight cash flow spot. Business owners either opt for a  loan or use personal credit cards for business purposes. A business card allows the owner to conserve that cash while still paying for its expenses to keep it afloat. 

Separates Business and Personal Expenses

One of the benefits of acquiring a business credit card is that you will separate your business expenses and personal ones. Since a dedicated business credit card would stand on its own, you can better track your business spending. Having two separate statements not only saves you time but also offers convenience for record-keeping and filing your annual tax returns. Besides, it will give you a clear perspective of how well the business is doing financially while allowing you to keep all the accounting and financial records straight should there be an audit.

Builds Business Credit

Even if you are fortunate enough to have the luxury of self-financing your business and never taking a business loan, it is still a good idea to establish good business credit that may prove useful during any unforeseen circumstances. Building a good credit rapport over the years will ensure you get approval at the lowest interest rate available. However, as highlighted at Nav Credit Card Marketplace, it is crucial to get a card from an issuer that reports to the three major commercial credit bureaus as building a good credit history with all three is key to having a strong business profile. 

Rewards and Perks

As businesses usually make larger purchases than individuals, many credit card companies offer valuable bonuses, discounts, and reward packages. Some may provide travel credits, which you could use to pay for airline tickets and hotel stays at discounted rates. These benefits may be appealing, as they could help you keep your expenses down. 

Additionally, some credits card may also provide rewards and benefits that cover other business-related expenses such as discounts on shipping and business supplies. These can be substantial as every penny counts for a small business. Being able to earn some extra dollars via points or cashback can play a considerable role at some point in managing your business expenses effectively. 

Higher Credit Limits

Spending the maximum limit on a personal credit card can negatively impact your credit score as you will have a high credit utilization ratio. Business credit cards usually have spending limits over $50,000 or even $100,000. That permits you to make large business-related purchases that would not otherwise be possible using a personal credit card or cash.

As finances are a huge consideration for many new businesses, a business credit card can be a useful asset if used strategically to manage company expenses. It helps manage cash flow effectively, build a positive credit rating, and earn added benefits like luxurious rewards and perks.