How to Save Your Small Business with Credit Cards
19 Apr, 2016 / Comments: Comments Off on How to Save Your Small Business with Credit Cards / By William Mahnic
If funding is short for your small business, then don’t panic just yet. Did you know that the creation of Google was made possible by two Stanford University students spending $15,000 across three credit cards to purchase disk space to accommodate their search engine? The world’s most popular search engine would not be possible if its founders gave up due to a lack of cash. Although your small business might not be the next world-altering startup, obtaining a credit card may just be what your business needs to survive and even thrive. Here are a few ways that a credit card can help save your small business.
Avoid Having to Use Liquid Cash
Obtaining a credit card allows you to manage your company’s finances using credit instead of liquid cash, which leaves you much more leeway. Although some expenses may require having cash on hand, in this day and age most bills and purchases can be made using a credit card. Using one for many of your expenses allows you to save your cash for emergencies.
Allows You to Obtain Working Capital
Obtaining working capital is much simpler when you have a credit card on hand to circumnavigate the hassle of small business loans. This is especially the case if you have a seasonal business, as you can survive off of credit until your business’s on-season, at which time you can pay off your credit cards.
Gain Bonuses from Spending on Credit Cards
Many credit cards allow you to gain substantial rewards for spending on particular items that you would buy for your company anyway. For instance, you can gain cash back on office or Internet supplies, phone, gas, or traveling. This money can go right back into your business to help you keep it going. Finding a credit card with good bonuses is especially beneficial if you travel a lot for your business, as you can gain a substantial amount of rewards for doing so.
Increase Your Credit Score
By ensuring that you make payments on time every month and keep your credit card balance low, you can build both your personal and business credit score, which allows you to get more affordable loan and credit opportunities in the future to keep your business afloat and thriving. However, be aware that this goes the other way as well. If you are unable to repay your credit card bills on time, your business can start negatively impacting your personal credit score and your finances.
Credit Cards Are Often More Affordable Than a Loan
If your small business is in trouble, then the more money you can save the better. Although the APRs (Annual Percentage Rate) on a credit card is often quite high, it usually is better than that of a loan. This is especially the case if your business is young and if you have a less than ideal credit score. If you need funding fast, and the only type of loan that you are qualified for is a short-term loan, then the APR for a business credit card will likely be more affordable. Ensure that you do the math to determine what’s the most sensible financing for your situation. Additionally, keep in mind that many credit cards have 0% intro APR deals that are worth taking advantage of to save a substantial amount on your purchases.
Credit Cards Will Get You the Funding You Need Fast
If you need funding quickly, then getting a credit card will give you the flexibility and speed that is often crucial when your business is in trouble. Credit cards can be secured within several days if not hours of applying, which allows you to deal with unforeseen circumstances and unexpected costs. On the other hand, taking a bank loan out can take a couple of weeks to months, which can be too long to save your business