Paying for Business Expenses Applying for a business credit card is something a small business should seriously consider for itself. Business credit cards can provide a range of benefits to a business. They allow a company to build up credit for better borrowing conditions down the road. They’re also quite easy to apply for. In this article, we’ll go over how to apply for a business credit card and other important points to note. What Is a Business Credit Card? A business credit card is a credit card that is intended for business expenses. These cards are not meant for any individual’s personal use, but they are available to businesses of all sizes. What Is a Business Credit Card Used For? Business credit cards are meant for business expenses, and as such, they come with several perks that you wouldn’t get with a normal credit card. Business credit cards typically have far higher credit limits than normal cards, but they are also harder to qualify for. [youmaylike] As a business phenomenon, business credit cards vary their offers greatly, and certain cards are meant for certain businesses. They are also highly customizable when it comes to individual payment terms. Businesses don't always have consistent incomes like individuals do, and business credit cards handle this problem. These cards are used to gain access to a long line of credit, to control employee spending on business expenses and more. One of their other common uses is to make accounting easier, as putting all business expenses on one separate account makes reporting to the Internal Revenue Service easier. In the end, there are many uses for a business credit card. Why Would I Need a Business Credit Card? You might not need one, but if you run a business, you’ll be leaving money on the table by not at least looking into them. Business credit cards can solve many of the problems business owners face. If you need employees to make purchases for the business, a business credit card is the safest option. These cards can be given to authorized users, a status you can easily give to any of your employees. From here, these cards make it easy to monitor employee spending and spot any discrepancies. You can attach customized user privileges to each card to limit spending and place limits on where the card can be used. As mentioned, if you feel like your credit is too limited, business credit cards are a sure way around low credit. According to the American Bankers Association, the average monthly payment on a business credit card is twice as high as the average payment on a normal one. If you’ve found yourself annoyed with the Internal Revenue Service over the complicated reporting processes for business owners, you’re not alone. This is where a business credit card can solve another problem. Simply handing over your business credit card statements to your accountant will make them love you. It will also provide them with the information they need to predict future spending. Another great use for a business credit card is lifting your liability for debts. Liability for credit card debt is determined by the liability offered by the card. If you’re using a personal credit card for business expenses, you are liable for all debts. On the other hand, if you use a business credit card with commercial liability, your business is liable for any debts, which changes the game. Keep in mind that some cards offer joint liability, which leaves both you and your business liable for any debts. Make sure you know what you’re getting into before signing any paperwork. Lastly, just as personal credit cards offer rewards programs, so do business cards. The main difference here is that business credit card rewards are tailored to your business needs. How to Apply for a Business Credit Card Before you apply for a business credit card, you should make sure you’re eligible. For the most part, you only require the following to be able to apply for one: A legal name for your business. A business structure to apply with, such as a Limited Liability Corporation. An explanation of the nature of your business. You’ll typically be given a list of industry types to choose from. A tax ID number issued by the Internal Revenue Service Your roll in the business you’re representing Various business/financial information including: Annual revenue. Number of employees. Length of time in business. Estimated monthly expenses. If you have this information ready, you can apply for a business credit card. At this point, it would be wise to shop around and find the best option for your business. Your decision on the business credit card you choose will have larger ramifications than your choice of a personal credit card. Applying for a business credit card is much the same as applying for a personal one. There are a few differences, but the main thing to remember is that business credit cards are taken more seriously than normal ones, so you’ll have to face a higher bar of entry. This doesn’t mean getting a business credit card is hard, but it does mean you need to arrive more well-prepared than you normally would. To make things easier, you can prepare for certain obstacles in advance. You may need to sign a personal guarantee that you will pay off any debts. Also keep in mind that if you’re the one applying for a business credit card, and your business doesn’t already have one, they will conduct a personal credit check. It may be best to try to optimize your personal credit if you plan on applying for a business credit card in the future. Some Options at a Glance Here are some of the most popular options for small business credit cards: Chase Inc Business Preferred This is a great option for a few reasons. With the Business Preferred card from Chase Inc, you get 80,000 ultimate reward points when you spend $5,000 with the card in the first three months. The card also provides generic, but highly useful benefits for business owners. Business Platinum Card from American Express The Business Platinum is ideal for businesses that spend a lot on flights and travel. This card offers numerous rewards on flight and hotel expenses and makes sure you get something serious back if you use it for these expenses. Chase Inc Business Unlimited The Chase Inc Business Unlimited offers unlimited 1.5% cash back. While we’ve said enough already, they also offer several other perks that are overshadowed by their first one.
Boosting Your Finances
What are Cash Back Loans?
Cash back loans are short-term loans that allow the applicant to get quick cash from a direct lender. Typically, these loans are meant to be very short-term and only used in the case of an emergency need for short-term cash. Once the cash is in hand, there usually aren’t any types of restrictions or requirements in terms of the spending of the funds – it is your discretion as to how you use the loan proceeds.
Generally speaking, these loans will have extremely high-interest rates and should only be used on a short-term basis. For repayment, the applicant will have the ability to pay back the loan in weekly or periodic terms or to pay it off in its entirety. Assuming you have the ability, it is best to pay these types of loans off as soon as possible so you can avoid incurring any exorbitant interest costs.
What is the process?
When it comes to getting a cash back loan, it is typically a relatively easy and quick process. Most of the speed and ease of application surrounds the fact that people pursuing this type of funding need it as soon as possible as they are likely in a cash crunch for the time being. Any type of cash back loan can be applied for through a local credit facility or creditor – they are pretty common to come by.
After finding the creditor that you would like to apply through, the next step of the process is to check what type of documents or information they require for the application. Usually, you will need to provide your social security number and various employment or salary details. Occasionally, you will need to also show proof of income so that the creditor knows that you will have the capability to pay the loan back in the future.
Fortunately, these loans tend to max out at around $1,000 and consequently do not require much credit history. The health of the applicant's credit is often overlooked, given the size of the loan and the fact that it is intended to be a short-term resolution. Once the application and required documents are submitted, the applicant can typically expect to receive the funding within a couple of business days at most.
Pay Attention to Fees and Interest Rates
The biggest downside to these types of loans comes in the form of exorbitantly high-interest rates and relatively high fees. Before applying for a cash back loan, look into the fees charged by that particular creditor. For example, many creditors will charge a specific dollar amount based on every $100 borrowed. Assuming an average fee of $15 per $100 borrowed, you can expect to pay back $345 on a $300 loan – this is extremely high when converted to an interest rate APR for any type of loan.
On top of that, there are a variety of different “hidden” fees that you might not expect or consider in your application process. Some of these fees to inquire about or look into are the following: rollover fees and late fees. A rollover fee is the cost to roll the loan balance over beyond the period in which it is due. A late fee is, as the name implies, a fee that will be charged for being late on the payments back to the creditor.
It is important to understand that every creditor has a different fee structure and will likely charge different fees or interest rates for a cash back loan. Throughout the application process, make sure that you fully understand the terms of the loan and everything that comes with the cash back loan that you are pursuing.
Cash Back Loans Aren’t a Long-Term Solution
Remember that cash back loans are not intended to be a long-term solution to financial hardship or difficulties. These loans, realistically, are meant to help resolve short-term and emergency cash issues for the applicant. Due to this, the interest rate and fees will be extremely high; pursue this loan option with caution and understand what you are getting into.
On top of that, consider the potential payback options that you have if you ultimately are approved for this type of loan. If possible, it is in your best interest to pay back the loan as fast as possible – this will avoid any interest accrual and will ideally save you money.
Learn all about balance transfer credit cards.