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Is a Small Business Credit Card Right for You?

The simple answer is likely yes — if for no other reason than how it can help you keep better records.

But there are numerous reasons a small business credit card will work for you. Increasingly throughout the U.S., small business credit cards are being used to keep businesses afloat, with more than 30 percent of business owners having used credit cards in the past 12 months to help finance their capital needs. Simply put, business credit cards help establish credit and can preserve cash flow in order to expand your business.

Some entrepreneurs see big value in small business credit cards, which often have sign-up bonuses and reward programs (think rewards points for everyday purchases and monthly Internet, business phone and cell phone bills) that are more generous than consumer credit cards. And it should go without saying that it’s never a good idea to use your personal credit card for business purposes. You may find it virtually impossible to separate your personal expenses from your business expenses, which could jeopardize your chance of securing a business loan, among other potential problems.

Here are a few more reasons to avoid this coming mistake:

Filing taxes. When you try to separate your business and personal records, you may not remember if they were for business or personal reasons. Small business credit cards, however, offer excellent tools to help with record keeping.

You could be putting your own credit at risk. Should your business fall on hard times, late payments or unpaid credit card bills will also hurt your personal credit.

Your business’ credit history. You are missing out on the opportunity to build your business’ credit history by associating its debt with your Social Security number rather than a Federal Employment Identification Number.



It’s important to remember that business credit cards should only be used to bridge short-term funding gaps and otherwise help manage expenditures. So if you’re just starting out in business and in need of capital, be very cautious of using credit cards as a main form of financing. If your business fails, for example, you will be saddled with debt for which you would be personally liable. That’s because business credit cards, much like consumer credit cards, require a personal guarantee.

Since business credit cards are short-term borrowing solutions, you might want to consider Accounts Receivable financing from a reputable financial institution or an operating line of credit loan to better manage your cash flow.

A good rule of thumb is that if you’re buying something that is going to be used or consumed within a matter of months, such as office supplies, advertising, or a business conference registration, you might want to buy it with your business credit card. If you see that you may not be able to repay such expenses within the card’s grace period (the period of time in which the expense charged to your card is not accruing interest), look at rates on term loans and operating lines of credit, as the APR on credit cards would be much higher. According to the personal finance website ValuePenguin, the APR on credit cards averaged about 15.37 percent in early 2016, compared with MidSouth Bank’s term loan or line of credit rate of between 5 percent and 13 percent.



  • Offers travel insurance and fraud protection
  • Monitors and manages expenses of employees
  • Reduces the need to keep petty cash on hand

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