Small business credit cards are issued by banks, credit card companies, and some credit unions. Small business credit cards can be used to supplement areas in which there is a lack of capital. The credit card application process varies depending on size of the company, years in service, credit history, and annual gross income. All of these factors are weighed to determine a company’s credit worthiness. For startup companies, lenders will usually want to look at the credit history of the company’s owner before deciding whether or not to issue credit.
One thing you need to pay close attention to is your company liability. In order to keep company liability low, these cards should be used very sparingly. They should not be used without performing a financial analysis to verify how much your business can afford to spend and pay back within an acceptable timeframe. A large number of unsuccessful businesses failed to do this and are no longer around. Make sure you understand all of the terms and the agreement before signing off on any form of credit. Also pay close attention to the base interest rate which can be found within the agreement. Most banks and credit card companies will give you an initial interest rate between 0%-13% depending on you or your company’s credit history. Within the agreement you will find the new interest which will take over after their initial interest rate ends. You will have to decide if your company can handle the new interest rate. My personal suggestion is to avoid using small business credit cards unless it is an emergency.