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.
What is a VA Loan?
In July 2023 (the month with the most recent statistics), the Veterans Administration released its monthly volume report, which showed that lenders originated 35,558 VA loans. These loans had an average balance of $374,429 and a total loan volume – in just one month – of over $13 billion.
That’s nothing to sneeze at, but what exactly is a VA loan?
A Veterans Administration (VA) loan is a type of mortgage loan program in the United States that is backed by the Department of Veterans Affairs. It’s specifically designed to assist the following groups:
Active-duty military personnel.
Veterans. Veterans who have not been dishonorably discharged all qualify for a VA loan.
Certain eligible members of the National Guard and Reserves. The requirements for these groups are a bit more extensive. They need to have completed at least six years of service, been honorably discharged, or been placed on the retired list.
Surviving spouses. A surviving spouse can also qualify for a VA loan as long as they haven’t remarried.
If you fit any of those categories, you can qualify for a VA loan. There are two ways that you can confirm this:
1. Apply for a Certificate of Eligibility through the Department of Veterans Affairs website.
2. Speak with a lender who specializes in VA loans.
But why would you want to pick a VA loan over any other loan type? Simple: because there are a lot of benefits associated with VA loans – and in this article, we’re going to go over the benefits of Veterans Administration loans.
VA Home Loan Benefits
1. No Down Payment
FHA loans require you to put at least 3.5% down. On a $400,000 loan, that means you must have saved at least $14,000 to apply.
Conventional loans typically require a much larger amount down, with many buyers putting down around 20%. On a $400,000 loan, that’s $80,000.
It can take people years to come up with the money required to buy a home in their area.
The biggest benefit associated with the VA loan program is the fact that you don’t have to put any money down at all to start building equity. This makes homeownership much more accessible to veterans and active-duty service members.
2. No PMI
In addition, if you put less than 20% down on a conventional loan, you have to make an extra payment every month for “private mortgage insurance,” which the lender will tap into if you can’t make your payment. FHA’s private mortgage insurance is baked into the loan and you can’t get rid of it even after you’ve paid off more than 20% of the loan.
For VA loans, that isn’t the case.
Since the Department of Veterans Affairs guarantees a significant chunk of your loan through your entitlement, there is no private mortgage insurance. If you default, the lender can access this money instead – that means more money in your pocket with a lower monthly payment, among other benefits.
3. Lower Interest Rates
The benefits don’t stop there, either. As of this writing, in September 2023, the average interest rate for a 30-year fixed-rate loan is 7.55%. The average 30-year fixed-rate VA loan is around 6.6%. On average, that’s what you can typically expect: VA loans have a lower interest rate of 0.5-1%.
But what does that mean for you? Let’s run the numbers again on a $400k loan.
For a conventional $400k loan with zero percent down, over 30 years, you’d pay over $1 million with a 7.55% rate, with $611,000 going toward interest.
For a VA loan of the same size at 6.6%, you’d pay only $919,000, with $520,000 going towards interest. This results in a savings of almost $100,000.
4. Lower Credit Requirements
VA loans are backed by the U.S. Department of Veterans Affairs, as we mentioned above. The government's guarantee of a portion of the loan reduces the lender's risk. If the borrower defaults on the loan, the government will reimburse the lender for a portion of the loss. This guarantee makes lenders more willing to offer favorable terms to borrowers, including those with lower credit scores.
5. No Limit
There is no limit on how many times a borrower can qualify for a VA loan. Many veterans believe that this is a benefit that they can only qualify for once – and once they’ve used it, it’s gone for good. That isn’t the case. Even if you went into foreclosure twenty years ago, you can still qualify for another VA loan. Many lenders have to charge a small “reinstatement fee” if this is your second VA loan, but it can be done.
However, just because there’s no time limit doesn’t mean there isn’t a limit on the number of VA loans that you can have. Since you’re supposed to use a VA loan for your primary residence, most service members will only have one open at a time. In some cases, they might be able to qualify for two.
6. Foreclosure Support
8 out of 10 VA home buyers put no money down.
Yet the foreclosure rates for VA loans are among the lowest. One reason might be that service members have the discipline and fortitude to make their payments no matter what, having gone through rigorous training in the military.
Additionally, the Department of Veterans Affairs does everything in its power to help keep veterans and active duty service members in their homes.
Conclusion: VA Home Loan Benefits
There are a lot of benefits to buying a home through the VA program: no down payment, no PMI and low interest rates, to name a few.
VA home loans are some of the best loan products available to buyers, and they come with added protection from the Department of Veterans Affairs. If you can qualify for a VA loan, it’s a better option than virtually all other loan types.