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When
you decide to start a small business, you find out
pretty quickly that it takes more than skills and
dedication in your respective area of work.
Besides being good at what you want to do, you
also need to known your accounting and financing
issues, no matter how annoying and boring these
may be. And the
credit card
problem for small businesses needs careful
handling, just like that of a regular, personal
credit card.
Choosing the right type of credit card is vital
for the success of a small business. Even if you
don't have access to a corporate credit card, a
small business card can be a major tool on the
path to success. When you apply for a small
business credit card, lenders will analyze your
request from a variety of points of views. While
their evaluation of the risk may vary according to
various local factors, they will all take into
account the "five Cs": capital, capacity to make
the payments, collateral, conditions and
character.
Capital, meaning your personal investment in the
business, outlines not only the size of the
business, but also how much risk you are willing
to take. Balance risks carefully - too much means
you will be rated reckless, too little, and the
lenders may think you are not serious about this.
The capacity to repay the loan is, of course,
critical for the lender and will be carefully
analyzed. The collateral or the guarantees will
show that you have a backup plan for returning the
loan, in case things go wrong. The conditions
represent the general situation in your
geographical area and your respective line of
business - mostly things that you cannot control
(but you can make them look better in carefully
planned business plan). Last but not least,
character is the impression you make on the
lenders - how trustworthy and business-oriented
you appear to them.
If
you take all these into account, your application
is more likely to be successful right from the
start. Of course, you also need to consider,
carefully, which type of business card suits your
needs.
Many small businesses rely on cash flow to pay for
suppliers or contractors, because they need to
purchase materials and services before their own
clients pay up. You need to calculate the
difference between the date when you purchase the
materials and the date when the clients pay you
back. If this is shorter than 30 days, go for a
card that doesn't charge you interest for the
respective period. If it is two, three months or
longer, go for a low interest card.
Also, you should think of how often you will have
to travel for business-related purposes, and how a
special type of credit card can help you with
this, or how you will handle unprepared emergency
situations that hustle small businesses
constantly.
Some of the offers for
credit cards
for small business include Blue for Business Card
- no annual fee,
0% intro APR
for the first 9 months, credit line
of up to $50,000 or Blue Cash for Business Credit
Card - up to 5% cash rebate, no annual fee, 0% APR
for up to 15 months. Advanta Platinum with
Rewards, featuring cash back
bonus, offers 0% intro APR
for balance transfers,
up to 50,000 credit line and various types of
rewards for the things you buy most often (gas,
office supplies and so on), bonus miles or cash
back.
The
CitiBusiness card has 0% APR for purchases for the
first 6 months, no annual fee, a generous credit
line and additional cards for the employees, with
a credit limit
set by you. The Platinum Business Credit Card from
American Express
has no annual fee and 0% APR for the first nine
months on purchases and balance transfers.
Other options include Business Green Rewards Cash
- no fees for the first year and no pre-set
spending limit, and the Business Cash Rebate from
OPEN: the Small Business Network, with up to 5%
cash rebate, no annual fee, 0% APR for the first
six months, no limit for cash back and no minimum
spending requirements.
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