Business Credit Card

One of the most difficult processes for a new business is developing credit. Most credit companies require the owners to use their credit personally, even though you have established a corporation that is a separate entity, the banks and credit card lenders still force the owner to sign personally on the dotted line. This makes it difficult for a new business to separate business and personal finances. Banks require two years tax returns from a corporation or 2 years of self employment persona tax returns from a small business person before they will issue any credit to the business and they still require the owner to offer a personal guarantee.

The easiest route to developing credit for your new business is through the use of company credit cards, now you have to be careful, many card issuers, offer cards that have your company name on them but they are still personal cards tied to the owners personal credit files.

If the application asks for your social security number and not your business tax ID number that is a give way that these are personal cards, or if they ask about your personal finances and income and not about the business again, a giveaway.

Finding business credit card offers for new or small businesses is difficult. Many of the credit card companies think of a self employed person or an entrepreneur as an individual and not a business and will not issue business cards to them.

Recently Applied Bank has developed a program for small businesses regardless of size and longevity. Their program is called the Applied Bank Microloan card. It offers a small credit line with higher interest and fees, but allows a business to have a business line of credit and to develop its own credit history.

There are many advantages to a business credit card; you can get cards issued in employee’s names so they can use the company card to purchase office suppliers, cover travel and meals or other business related expenses. Otherwise they have to use their own personal cards or you have to offer cash advances. Or have signed checks in the office so they can run to office depot to pick up printer ink.

Having a business credit card is a big step for a new business, it gives you flexibility and can help in those short term cash flow crunches. Once you have a business card, your credit limit should grow with your business. See also, business credit cards.