Starting a new business comes with various challenges and a business credit card can provide you access to the funding necessary to maintain operations. Getting a business credit card for your startup can be a great way to manage business expenses, earn rewards, and establish business credit. Educating yourself on the requirements and associated fees before applying can help you determine if a business credit card is the right source of funding for your startup. Credit cards are not designed as a long-term financing solution for major expenses such as inventory. Startups may need to consider startup inventory financing and other options in combination with a credit card.
Inventory is often a businesses largest expense and can present a major cash flow dilemma. Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity. With ideal funding solutions such as Kickfurther available, before concluding that a business credit card is the answer – do your research.
Looking to apply for a business credit card for your startup? Here’s what you should know.
What is a business credit card and how is it different from a personal credit card?
A business credit card is a type of credit card specifically designed for the use of small business owners and entrepreneurs. It offers features and benefits that cater to the needs of businesses, such as rewards for business-related expenses, employee cards, and detailed spending reports. A business credit card is different from a personal credit card in several key ways:
- Business Ownership: A business credit card is issued in the name of the business, rather than an individual, which means the business is responsible for paying the debt.
- Credit Limit: Business credit cards typically have higher credit limits than personal credit cards, which can be helpful for managing expenses associated with running a business.
- Rewards: Business credit cards offer rewards and cash-back programs that are tailored to the needs of businesses, such as rewards for office supplies, travel expenses, and fuel purchases.
- Spending Reports: Many business credit cards offer detailed spending reports that can help business owners track expenses and monitor employee spending.
- Tax Deductibility: Business expenses charged to a business credit card may be tax-deductible, which can provide a significant benefit for businesses.
What are the benefits of using a business credit card for startups?
Using a business credit card for your startup provides numerous benefits, including:
- Building credit: A business credit card can help establish a credit history for your startup, which can be helpful in securing other financing in the future.
- Separating personal and business finances: By using a business credit card, you can keep your personal and business finances separate, making it easier to track expenses and monitor the financial health of your business.
- Rewards and cash back: Many business credit cards offer rewards and cash-back programs that can help you save money on business-related expenses, such as travel, office supplies, and fuel purchases.
- Improved budgeting and expense tracking: Tack expenses in real-time and see where your money is going, making it easier to manage your budget and keep your business financially healthy.
- Inventory purchases: Business credit cards can provide the additional buying power needed to fund larger inventory purchases and can streamline the purchasing process.
Struggling to make the large inventory purchases your startup needs to continue growing? Learn more about inventory financing. Credit cards can help improve cash flow, but be careful swiping if you don’t have the cash to cover the balance.
How can a business credit card help with cash flow management?
As a startup, cash flow management is essential to maintaining operations and meeting your businesses financial obligations. Business credit cards can help manage cash flow by offering purchasing power and reducing the amount of money on hand that is needed to cover day-to-day expenses, rather than paying for everything upfront. If you use your business credit card responsibly, you may be able to increase your credit line, providing your business with more funds in the future and greater purchasing power.
What are the eligibility requirements for obtaining a business credit card?
The eligibility requirements for obtaining a business credit card can vary from card to card and from lender to lender, but typically, the following requirements are necessary:
- Business structure: You must have a legitimate business structure, such as a sole proprietorship, partnership, LLC, or corporation.
- Business information: You’ll likely need to provide information about your business, including the type of business, the length of time it has been in operation, and the business’s annual revenue.
- Personal information: You’ll also likely need to provide personal information, including your Social Security number, date of birth, and income.
- Credit score: Lenders can check your personal and business credit scores to determine your eligibility for a business credit card. A good credit score, typically 680 or higher, is usually required to be approved for a business credit card.
- Business financials: Some lenders may require financial information about your business, such as balance sheets, income statements, and tax returns.
It’s important to note that requirements can vary depending on the lender and the type of business credit card you are applying for, so it’s a good idea to check with the card issuer to see what specific requirements they have. In general, having a strong credit history, established business, and a solid financial record can help increase your chances of being approved for a business credit card.
Do business credit cards help build business credit history?
Yes, using a business credit card can help build business credit history. Business credit history is a record of a company’s borrowing and payment history and can be used to assess the creditworthiness of a business. By using a business credit card and paying bills on time, you can demonstrate to lenders and credit bureaus that your business is financially responsible and capable of paying its debts. Having a strong business credit history can be beneficial in several ways, including improved access to future funding, lower interest rates, higher credit limits and better negotiating power when negotiating terms with suppliers and vendors.
What are the rewards and perks offered by business credit cards?
Business credit cards often offer a range of rewards and perks to incentivize business owners to use them.. Some of the most common rewards and perks offered by business credit cards include:
- Cash back: Earn a percentage of your spending back in the form of a cash rebate.
- Travel rewards: Frequent flyer miles, hotel points, or travel credits, for purchases made with the card.
- Points programs: Earn points for purchases and redeem them for a variety of rewards, such as merchandise, gift cards, or statement credits.
- Employee cards: Add employee cards, which can be a useful tool for managing expenses and keeping track of spending.
- Sign-up bonuses: Certain number of points or cash back, for meeting a minimum spending requirement within a certain period of time.
- Perks: Such as extended warranty protection, concierge service, or travel insurance.
It’s important to keep in mind that rewards and perks can vary greatly from card to card, so it’s a good idea to compare different business credit card offers and choose the one that best meets your business’s needs and spending habits. Additionally, be sure to read the terms and conditions carefully to understand how rewards and perks are earned and redeemed, and what the restrictions may be.
What startups should look for when choosing a business credit card
When choosing a business credit card for your startup, you should consider several key factors to determine the best card that fits your business’s needs. This includes analyzing rewards offered, interest rates associated with the card, annual fees, potential sign–up bonuses, and repayment options.
- Fees associated with business credit cards: It’s important to understand all the fees associated with a business credit card before you sign up, so you can determine whether it’s a good fit for your business’s needs. Typical fees that may be associated with business credit cards, include:
- Annual Fees: Some business credit cards charge an annual fee to use the card, which can range from $0 to several hundred dollars.
- Late Payment Fees: If you miss a payment deadline, you may be charged a late payment fee.
- Over-Limit Fees: If you exceed your credit limit, you may be charged an over-limit fee.
- Balance Transfer Fees: If you transfer a balance from another credit card to your business credit card, you may be charged a balance transfer fee, typically a percentage of the amount transferred.
- Cash Advance Fees: If you take out a cash advance with your business credit card, you may be charged a cash advance fee, typically a percentage of the amount advanced.
- Foreign Transaction Fees: If you use your business credit card to make purchases outside of the country, you may be charged a foreign transaction fee, typically a percentage of the purchase amount.
How Kickfurther can help
While business credit cards offer access to funding day-to-day purchases, they can come with high interest rates, rigid repayment schedules, and limited funding. Therefore they are less than ideal when it comes to funding large inventory purchases. If you’re looking for an affordable inventory funding solution – Kickfurther is the golden ticket. Kickfurther’s platform helps entrepreneurs secure funding for their largest expense – inventory! It’s our mission to hustle alongside you and your dream to open new doors.
Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you control. Kickfurther’s unique funding platform can fund your entire order(s) each time you need more inventory, so you can put your capital on hand to work growing your business without adding debt or giving up equity.
- No immediate repayments: You don’t pay back until your product sells and you control your repayment schedule.
- Non-dilutive: Kickfurther doesn’t take your equity.
- Not a debt: Kickfurther is not a loan, so it does not put debt on your books, which can sometimes further constrain your access to additional capital providers and diminish your valuation if you approach venture capital firms.
- Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.
By obtaining a business credit card, you can gain access to capital that can assist with maintaining day-to-day operations. Educating yourself on the requirements and associated fees before applying will help you determine if a business credit card is the right source of funding for your startup. It is also encouraged to explore alternative funding options, such as inventory funding from Kickfurther, that can help you fund inventory to meet demand without exhausting your cash on hand.
Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:
#1. Create a free business account
#2. Complete the online application
#3. Review a potential deal with one of our account reps & get funded in minutes