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When starting a business, one of the most common methods of business financing methods that many people pursue first is small business credit cards. (No personal guarantees are available on that statement of course, as many people go for business loans, lines of credit or simply finance the whole thing out of pocket. However, few businesses will go without credit cards and their excellent benefits and huge limits, so let’s talk about what you need to know before applying for one.
Business credit cards are excellent first-time sources of credit. Most people are already somewhat familiar with how they work from personal credit cards which, I do not need to say, are already in abundance in this country. However, business credit cards are slightly different, as they do not pull from the credit of an individual, but from the credit of a legal business entity. So to set yourself up with a business credit card, you first need to incorporate or form a Limited Liability Company or C-corp. Once these companies are registered you can then apply for business credit cards. No personal guarantees are offered on them though; business credit cards are tougher to get than personal credit cards, and the number of rejected applications for new entrepreneurs’ applications are very high.
When applying for a business credit card, you want to make sure that the credit is being pulled from your business credit and not your personal credit. Make sure to double-check your homework; with business credit cards, no personal guarantees are given.
Having a business credit card is very useful in providing someone with an opportunity for credit building and other benefits that would not exist in the market otherwise. Make sure you’re getting a good card and you will be on your way!