Most small and medium enterprise (SME) owners start needing external financial resources during the initial stages of their business. They may need anything from a personal computer to specialized machinery to help them grow.
However, getting access to credit as a new business can be incredibly challenging. According to a recent survey by Tradeindia, 83% of SMEs lack access to business credit.
Here’s where a business credit card comes in handy. A business credit card, also known as a SME credit card, provides a credit line to small businesses to help them meet their financial needs.
There is no set period or stage at which a small or medium-sized business must apply for a business credit card. However, there are a few situations in which they may need it. Among them are:
Financing Large Purchases
There are various instances in which a small business may need to make substantial expenditures to expand its operations and business growth. These cards are an excellent option instead of applying for a bank loan.
Several business credit cards for startups and SMEs, such as founderscard, offer a great no-interest period that can assist finance that purchase and pay it off without making any additional payments.
Separating Business & Personal Purchases
During the initial stages of a business, most entrepreneurs utilise personal credit cards for business purposes. While this can be beneficial at the stage, but it can be damaging to their personal and business credit scores.
Using a company-specific card to segregate personal and business expenditures might also help to clarify expenses when filing taxes.
Earning Rewards on Spends
Running a business requires frequent expenditure. By opting for a business credit card, the company can make those purchases and earn rewards.
Based on how it is spent, the credit card issuer may give accumulated points, rewards, or cash back that can help the business. These points can be redeemed for deals that help businesses save money.
Building Business Credit Score
A credit score for a business is different from a personal credit score but functions similarly. It indicates how likely the business is to pay off its loans and borrowings.
A good credit score is essential, and a business credit card can help with this. Whether the business has no or poor credit, it can improve its score by making prudent purchases and paying on time with a business credit card.
Is your business looking for a business credit card in India? founderscard is a leading business credit cards for startups and SMEs, offering a variety of benefits such as a 48-day interest-free credit period, EMI conversion, a business-specific rewards-redemption catalogue, and more.
Interested? Get your founderscard right away!
