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.
Personal Loans for Poor Credit
Are you looking for a personal loan with poor credit? Credit scores in the U.S. range between 300 and 850. Generally speaking, if you have a credit score of 579 or below, you’re considered to have poor credit.
The lower your credit score, the more difficult it will be to obtain a personal loan. That’s because in the eyes of the lender, a poor credit score means there’s a lesser chance you’ll repay the loan on time and in full.
While obtaining a personal loan application approval may be more challenging, a personal loan is usually better than payday loans. Although you may pay a higher interest rate for your personal loan compared to someone with good or excellent credit, the interest rate is most likely a lot lower than you’d be paying for a payday loan.
In this article we’ll look at types of personal loans for people with poor credit, how a small personal loan can help repair bad credit, the more rigorous lending terms and the importance of monthly payments.
Types of Personal Loans for People with Poor Credit
There are two main types of personal loans for those with poor credit: unsecured and secured personal loans.
As its name alludes to, an unsecured personal loan doesn’t have any assets securing it. For that reason, unsecured personal loans tend to be more challenging to get when you have a poor credit score. That being said, since there isn’t an asset you’re pledging as security, unsecured loans usually take less time to be approved and require less paperwork. Since the risk for the lender is higher (because there isn’t an asset being used as security), the interest rate is almost always higher than secured personal loans.
On the other hand, secured personal loans use an asset, such as your home or car, as collateral to secure the loan. Secured loans can take longer to be approved, since the lender usually needs to determine the value of the assets you’re pledging as security through an appraisal. However, the upside is that you can usually borrow a larger sum of money at a lower interest rate with a secured versus an unsecured personal loan.
How a Small Personal Loan Can Help Repair Bad Credit
Before we discuss how a small personal loan can help repair bad credit, it helps to understand how credit scores are calculated.
In the U.S. there are three major credit reporting bureaus: Equifax, Experian and TransUnion. Although the credit reporting bureaus are secretive about how exactly credit scores are calculated, we do know there are several factors used to determine your credit score. Those factors are payment history, how much you owe, length of credit history, new credit applications and types of credit used.
Each of those factors has a different weighting, but what we do know is that payment history matters the most when it comes to your credit score. If you consistently do a good job of making payments on time on your various credit accounts, it should reflect well in your credit score.
Now that we have a better understanding of how credit scores are calculated, let’s go back to the question at hand.
A small personal loan can help repair bad credit because it can help improve your payment history. By consistently making your payments on time for your small personal loan, it can go a long way in repairing and rebuilding your credit score.
Before signing up for a small personal loan, it’s important to make sure it will show up on your credit report. To find out, be sure to ask the lender if the small personal loan will be reported to the major credit bureaus. If it is, then it should help you, but if it isn’t, it won’t do you any good with respect to improving your credit.
The More Rigorous Lending Terms
Similar to most things in personal finance, there’s no such thing as a free lunch. The same holds true with small personal loans. It’s important to note that small personal loans for poor credit almost always come with higher interest rates. Some also come with steep fees. There also isn’t a guarantee they’ll greatly contribute to improving your credit score.
A better approach may be to rebuild your credit score with a secured credit card (a credit card where you’re required to make a security deposit). However, not everyone has the savings to make a security deposit. If you’re one of those people, then you can either wait until you’re able to save up enough for a security deposit for a secured credit card, or you can sign up for a small personal loan now and start rebuilding your credit score right away. The choice is yours.
The Importance of Monthly Payments
I can’t emphasize enough the importance of regular monthly payments. When the small personal loan is reported to the credit reporting bureaus on a monthly basis, you’ll be able to rebuild your credit faster than if the payments occur less frequently.
Monthly payment is a common payment frequency for credit, whether it’s credit cards, car loans, personal loans or lines of credit. By demonstrating that you can handle monthly payments on a regular basis, it should go a long way to showing lenders that you’re someone they can trust.