Opting for a business credit card is one of the simplest and most accessible ways to financially assist your company, regardless of its age, size, or sector. But exactly, how do business credit cards work? Business credit cards provide you with access to a line of credit at the point of sale, as well as benefits, incentives, and rewards. However, your corporate credit card is designed to support your company’s spending rather than your personal finances.
Here are a few more points to explore regarding how business credit cards for startups function. Let’s understand in brief before you get it.
Easier To Qualify for Loans
While applying for a small business loan you need to provide a host of credentials, such as strong revenue, time in business, credit score, and more. When you apply for a business credit card, all these processes are simplified and made easy for the customer. Also, the corporate credit card provides immediate access to funding. Adding to this, it will make you appear more professional, which will boost the credibility of your business.
Card Issuers Look at Your Business & Personal Financials
Your card issuer will seek details about your business financials, such as your revenue and estimated monthly spending, on your business credit card application. You don’t have to worry if you’re a startup with little business income—as the principal cardholder, you can also submit your personal income and personal outstanding debt on your application. That is how they will evaluate your debt-to-income ratio, which will indicate the card provider if you have the financial capacity to take on more debt. And your card issuer may still accept you for a business credit card if you demonstrate that you can repay what you owe, whether with cash from your business or not.
Does Not Affect Your Personal Credit Score
Even though credit card providers will look at your personal credit score throughout the process, using your corporate credit card may have no effect on your personal credit score. All of this is dependent on whether the issuer reports credit activity to consumer credit bureaus, whether positive, negative or both. Check with the card issuer directly to discover how and where card activity is reported. As a result, as you build your business credit history through responsible card usage, you’ll be in a better position to qualify for a traditional business loan later on.
Provides Perks and Rewards
A corporate credit card, like your personal credit card, can provide a range of rewards programs, such as cashback incentives, redeemable points, and travel insurance. Unlike your personal credit card, though, many rewards schemes are designed particularly for companies. Credit lines on business credit cards are generally bigger than on personal cards, giving you more money to spend on the tools and materials your firm needs to thrive.
Use For Only Business Expenses
It is important that you only use your corporate credit card for business purposes. Separating your personal and corporate funds reduces the possibility of simple errors. This clarity is essential as tax season approaches. Being careful about where you use your card allows you to assess where you’re spending money as a business without having to pick out personal expenditures. That way, you can quickly assess your spending patterns and decide where you can save or where you have some spending room.
Final Words
Whether you’re just getting started with your new business or looking for a simple financing tool to help you scale your business, corporate cards are a wise choice to consider.
founderscard, one of the best business credit cards for SMEs exclusively designed to address your credit needs and manage your business expenses. Get your founderscard today and manage your business smoothly.
