Small business credit cards are an invaluable tool for business owners. They are an easy way to access cash without having to worry about collateral or lengthy applications. They benefit businesses in a number of ways, including providing financial responsibility and accounting clarity, helping buinesses manage cash flow more efficiently, and giving businesses access to valuable rewards programs. With several different types of credit cards available designed specifically for small businesses, there is sure to be one that fits the needs of any type of business. Whether starting a new business or running an established one, it may help provide the funding needed to take the next step in success.
Small business owners will find better protection, and often better rates, by using a personal, rather than small business credit card. Protections under the CARD Act of 2009 carry distinctions between the two. This probably explains the low take-up of small business cards while consumer cards flourish. The article recaps six risk factors between the two cards.
• Higher interest rates
• Potential to change terms overnight
• Due date changes by issuer
• More penalties
• Unpredictable rate increases
• Liability for employee purchases
Credit cards offer small businesses options for managing cashflow, but if a small business is between $1 million and $5 million in revenue, it might be a better option to have a dedicated consumer card.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
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