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.
Should You Get a Personal Loan?
Before checking on different options or alternatives that individuals with fair credit can pursue, it is important to understand whether or not you should get a personal loan in the first place. First and foremost, you should consider the reasons for pursuing the loan – why do you need the money? The two primary justifications for a personal loan are as follows: if you have a one-time payment that you need to make or if you are looking to consolidate existing debt into a single, lower-interest-rate loan.
Additionally, it is essential to consider what you can afford in the loan as well as what type of loan value and interest rate you qualify for. When considering the affordability of a loan, the individual should carefully evaluate their budget and comfortably make the monthly payments. In terms of qualifying for a loan, lenders often take a handful of things into account. The most obvious attribute in the application process is the credit score of the applicant; although, that isn’t the only thing. Lenders will often consider credit history, income level, and your existing debt-to-income ratio.
When considering your eligibility for a personal loan, be sure to consider all dynamics that could paint a more vivid picture than just your fair credit score.
Where Can You Get a Personal Loan?
There are quite a few creditor parties that will fulfill and provide personal loans for a suitable applicant. While it is important to understand your own credit profile when deciding on whether or not to get a personal loan, it is equally as important to understand your options of creditors and what they typically provide.
When pursuing a personal loan with fair credit, there are a few different providers that would typically fit the bill. One of the more common lenders nowadays is online lenders. Being a relatively common way for individuals to get a personal loan, online lenders are generalized as being higher risk due to the nature of internet scamming – be careful with these types of lenders.
On the contrary to a solely online lender, some borrowers prefer to use either a bank or a credit union. Both alternatives come with the guarantee of brick-and-mortar locations, where a consumer can feel comfortable going in person to get any questions or concerns addressed – the online lending option, unfortunately, doesn’t provide this comfort. Banks, unfortunately, tend to have stringent requirements when compared to online lenders, which ultimately might result in a fair credit application being denied. Similarly, credit unions typically require applicants to have an existing account with them or to meet some type of employment requirements.
Be sure to consider all options of lenders before making a decision!
Rates and Fees for Fair Credit Applicants
Applicants should consider the rates that they will face on their personal loan as well as the fees that could be enveloped in their application or fulfillment process. According to research aggregated by Forbes advisors, a fair credit score ranging from 601 to 780 credit sees an average interest rate between 10.93 and 15.56%. Realistically, each individual applying for a loan will have their own unique set of circumstances and situations, which will ultimately impact their viability as an applicant. These rates, while being the average, will vary from applicant to applicant.
Similar to the above information, an applicant should take into account the fees that they will need to pay throughout the process of obtaining a personal loan. Each lender will have different fee structures and should be considered before making your ultimate decision. Some lenders, for example, have flat origination fees, while others provide an origination fee structure that is a percentage of the total loan size. The preferred fee structure will vary depending on the applicant – be sure to understand the interest rate and fees that you will need to pay for whichever personal loan you choose to pursue!
Some Personal Loans and Where to Look
So, with everything above being noted, let’s break down some places to look at when considering whether or not you want to pursue a personal loan with fair credit. Some common platforms that aggregate lenders’ information regarding personal loans include LendingTree and CNBC.
On these platforms, you can scroll through a variety of personal loans and personal loan creditors – they provide interest rate and fee information for each lender and the loan that the reader could apply for. Assuming you decide that a personal loan is appropriate for the situation or circumstances that you face, make sure to shop around.