Applying for a business loan from a bank is a time-consuming and often frustrating process. After all, who wants to round up numerous documents and then wait as long as a few months just to learn whether the lender approved or denied the application? For small business owners who need greater flexibility with business financing, taking out a company credit card is a better idea.
Small Business Credit Cards Offer Many Benefits When Used Wisely
When a lender approves you for a small business credit card, you must use it for business-related purchases only. Don’t make the mistake of adding small personal items together with business items and then charging everything on the same card. Mixing personal purchases will make it much more challenging to complete both your business and personal tax returns next year.
Like a personal credit card, your small business credit card comes with the maximum amount you can charge. If you don’t pay the balance in full each month, it carries over to the next statement and the credit card issuer adds interest. Be sure to pay as much of the balance as you can each month to avoid seeing your small business go into debt.
Not only are bank loans challenging to obtain, but they are inflexible as well. You make the same payment each month regardless of revenue and must continue to do so for the life of the loan. Once you have paid off a bank loan, you must apply for a new one if you need additional business funding.
Small business credit cards offer much greater flexibility. You only make a payment the months you have a balance, and you can use the card an unlimited amount of times if you stay within your credit line and don’t make any late payments. Credit cards applications are simpler than bank loan applications and typically don’t require extra documentation.
Are you considering applying for a credit card for your small business? Contact GP Capital Solutions today to learn more about your business financing options.