Since April, the top TARP recipients cut their small business loan balances by $8 billion dollars. While traditional loans dry up and credit lines get cut, banks have decided to funnel more of their small business lending through credit cards for business.
As these cards enter the market to compete for your business it’s important for you to consider all the perks and compare the costs to the benefits. Here’s a few:
Many business credit cards now offer cash back rewards. For example Chase’s new InkSM Cash has unlimited cash back and accelerated earnings on its card. This is a great perk because it rewards you for spending on everyday business purchases that you do already. Make sure you understand what the card’s limitations are and read the fine print before you apply.
Frequent Flyer Mileage
Getting frequent flyer miles using your business credit card is a very popular perk for business travelers. Once you accumulate enough points you can redeem them for airline discounts or free nights at participating hotels. Make sure you know if there are any limitations prior to applying.
No Annual Fees
Many business credit cards now waive the annual credit card fees. Keep in mind that your credit score needs to be strong to get these cards. However, if your business pays its balance in full every month then this is definitely the way to go if you can. In effect, if you pay your balances, you get the credit card for free.
Zero Percent Balance Transfers
This can help you reduce your high interest debt. Be sure to never miss a payment or you’ll immediately lose your interest free terms and have to pay the full rate.
Traditionally, the majority of the business credit cards in the marketplace report your payment history and revolving debt to your personal credit files not your business credit files.
However, some companies have started to catch on to the new world of business credit cards like JP Morgan Chase and American Express. They understand that business credit cards are for business purchases and any debt incurred should only report to a business credit report not a personal one.
When you apply for a business credit card they check your personal credit report, but your payment history and debt report to the business credit bureaus! This is what every small business owner like you should demand from a business credit card.
One important catch is if your accounts become delinquent then Chase and Amex will report the delinquency to your consumer credit bureaus as well.
No Personal Liability
Keeping liability strictly tied to your business can be accomplished with no personal guarantee business credit cards. There are less than forty of these types of cards available and you will need to have a strong business credit file in order to qualify.
With the growth in business credit bureaus, data suppliers, and business credit files across the country more and more lenders will have to supply an ever growing demand of new business credit cards that will have to measure up to the needs of today’s small business owner.
I encourage you to choose business credit cards that will best serve the needs of your business while supporting the growth of your business credit file and limiting personal liability.
Marco is founder of the Business Credit Insider’s Circle available at Start Business Credit.com
You may contact Marco directly at: firstname.lastname@example.org