Small Business Credit Cards

Small business credit cards are ordinary credit cards that are issued to the legal persons conducting small and medium business affairs. Despite the fact that small business credit card is issued to companies like personal credit cards it carries personal liability. If a business fails to cover outstanding debt, card issuer may require the amount from the personal who signed the card. The good thing about this is that after some years of good payments, card issuer may remove the personal responsibility of card signer for the liabilities of the company. However such decisions are made on case-to-case basis and if the decision is positive signer is not kept liable for the debts of the company.

Although small business credit cards are not the main things that are required for business startups and also may not be the best method to get funds, they are extremely convenient tool to smooth a company’s cash flows and avoid cash shortages that new business may face. Such credit cards may be used in cases, when urgent purchases are to be made and company experiences cash problems. In other words for ordinary business small business credit cards issuers are “lenders of last resort” and such services are relatively rarely used than other banking services available on the market.

For new businesses small business credit cards may provide extremely convenient service. Although for “young” companies to large extent liabilities for business affairs of a company and personal affairs of company owners may be mixed and interrelated, small business credit cards allow carefully recording both and creating the strict demarcating lines among two: business cards are generally provided with piece of software that allows owners to accurately record transactions and makes calculations for tax purposes very easy.

One serious disadvantage that comes with this instrument is that payment overdues can harm your personal credit score, while ownership of highly leveraged business can make you more attractive for credit companies even if the debt repayments are not the best repayments possible.

One more disadvantage that these cards have is that they are poor at protecting customers’ rights. Cardholders cannot negotiate credit companies and hold disputed billings. For instance, when personal credit cardholders receive purchased goods in bad condition they may negotiate with credit-card companies to hold cutting disputed amounts, while for persons holding small business credit cards do not have this possibility.

So the question is: does it worth using small business credit cards? My answer would be the following: just have it. If your company has some other sources of funds, you shall not use it and if not it a convenient tool to have raise necessary cash. But be careful and use it wisely!