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Published By Credit Suite at August 25th, 2016
As a small business owner it can be quite a challenge deciding what is the best of business credit card. And this is for you and your business. All of these types of business credit cards can seem a little bit confusing.
When looking for the best types of card for your business you will first want to know about the different types of business credit cards that are available today.
A Business Debit Card is a card that works like a business checkbook. This is because the limit is the amount of funds you currently have available in your business checking account. Every time you use it to make a purchase the amount charged is deducted right from your account.
A Prepaid Business Card is a convenient alternative to carrying cash and works just like a secured consumer credit card. You add funds to your account and whatever amount you add is available to use for purchases.
A Secured Business Credit Card is specifically designed for businesses with no credit or less than perfect credit history. An initial security deposit is necessary. This establishes your card’s credit limit. In most cases a minimum deposit of $500 is necessary. And once you begin making purchases you will receive invoices like a regular credit card.
An Unsecured Business Credit Card works just like a normal, revolving, unsecured consumer credit card. Credit limits are based upon many factors depending on the issuer. And they can range from personal credit and/or business credit ratings, years in business, annual revenues and so on. These credit cards give your business the opportunity to earn incentives and rewards.
A Business Charge Card has all the convenience of a credit card. But it’s without the high price of interest. When using this card you’ll have to pay your balance in full each billing cycle.
Because you can’t carry a balance, a charge card doesn’t have a periodic or annual percentage rate. So there is no rate for a charge card issuer to disclose.
A No PG Business Credit Card is a card you can get without a personal guarantee. This card has a link to your EIN, not your SSN. And it requires no personal credit check or guarantee for approval.
If you plan on paying your balance off each month, a card offering travel mile rewards or cash back bonuses may be the best business credit card for you. However, if you plan on maintaining an ongoing balance, a low introductory or standard APR might be a better option.
Remember, just because a card issuer offers all kinds of perks and rewards doesn’t mean it’s necessarily the best card. Always read the fine print so you completely understand the terms and conditions and fees associated with the card.
It’s also important to note that even though business credit cards are not covered under the 2009 CARD Act certain issuers are extending the CARD Act protections to its card holders. This is just another factor to consider when applying for a business credit card for your business.
The more fundable your business is, the more types of business credit cards you can. It’s that simple. But is fundability in the first place?
So, what does it mean when we discuss fundability? What does it mean when we state a company is fundable? This fundable interpretation should get you thinking of your corporation — and corporate credit in a whole new light.
Let’s get that fundable meaning out of the way from the very start.
Fundable: of or capable of being funded; deserving of being funded.
Yet what is the fundable meaning in our context?
Here, the fundable definition is just a bit different.
While the fundable definition is still capable of being funded, it also indicates — able to be funded by a lender or a credit provider.
With this fundable definition, we are looking more at what credit providers and loan providers wish to see. But let’s step back for a moment.
You’re a company owner. And like every other entrepreneur, since the beginning of time, your business needs cash.
There are a few methods for corporations to get money. Without going into the core details, the primary ways for corporations to get cash are to:
(1) Sell products or services
(2) Sell their properties such as land, vehicles, tools, or office space in buildings they possess
(3) Get crowdfunding
(4) Get angel investing or venture capital payments, or
(5) Borrow money.
For the purposes of our fundable definition, we are just looking at # 5.
But loan providers and credit providers aren’t just going to rain money on your firm like it was the star in some latter-day ticket tape parade. Instead, they wish to see if your corporation is a good credit risk. To firms which are fronting your corporation money, they would like to know that you can pay them back — just as much as angel investors and venture capitalists wish to know that they are going to get a return on their investments.
Complicating matters is the problem of scams. Per a 2009 Experian report, “fraud-related costs for U. S. businesses are more than $50 billion annually. This figure may understate the extent of the problem, as estimates show that up to 30 percent of all bad-debt commercial losses are due to ‘soft’ fraud, which primarily occurs from material misrepresentation on an application. Combined with the fact that business fraud is estimated to be three to 10 times more profitable than consumer fraud, business fraud has become a growing concern for organizations.”
As a result of so much fraud, lenders and credit providers inspect credit applications exceptionally meticulously.
Essentially, they are trying to find all types of methods to tell you and your firm no when you come to them for money. Their fundable meaning includes the element of fitting their requirements for not being fraudsters. For financial institutions and the like, company legitimacy makes all the difference in the world. No legitimacy, then no funds. It’s that simple.
As a result of their careful checks for scams, lenders and credit providers are taking into consideration numerous different facets of your credit or loan application. They are taking a look at many elements of your corporation, as well, and even at aspects of you, the owner’s existence.
Your objective is to reduce their anxieties of scams. And the way in which you do this is by removing every reason they might point to, to potentially say no to offering you cash.
There’s one more reason that fundability matters. Your leads and customers likewise wish to feel that your business is the real deal. They do not want to do business with what they view to be a fly by night operation. And could you blame them?
Developing and enhancing fundability to lenders and credit providers will have the added perk of giving off a reliability vibe to the people and corporations intending to buy your goods or services.
Fundability begins with understanding what lenders and credit providers are seeking. Then we’ll take a look at just how to most effectively achieve and provide what they want.
Keep all records consistent to ensure fundability. Set up your business legitimately, with a domain, phone numbers, an address, and more. Get all ID numbers and register with the IRS. Set up your business bank account for fundability. Keep all business financials organized and have them prepared by a competent professional. Get your personal credit ‘house’ in order.
Being fundable means your business can get financing from a credit provider or lender. And the more fundable your business is, the more types of business credit cards you can get. Plus, your terms will be better. That means how long you will have to pay off your debts. And it means how much you will pay in interest. Further, it means how much you will qualify to borrow or leave on revolving credit.
There is a lot about your business over which you have zero to very little control. If you just so happen to choose a high risk industry, then that’s that. And you can’t change how long you’re in business for (don’t even think about buying a shelf corporation to try to do an end run around that!). You could move, but if you’re committed to opening a business in (for example) New Hampshire, then that’s that.
But you do have control over your business’s fundability. And that will directly impact the types of business credit cards you can get.
Click Here to get approved for business credit cards now for your business.