Archive for the ‘Business Credit’ Category
Financing a business can be a challenge, especially if you only have limited funds in your account. Most entrepreneurs seek out business loans or bank loans in order to finance their businesses. Aside from traditional business loans, what other options do you have? Where can you get additional assistance for your business financing purposes? In this article, we’ll be talking about business credit cards and how they can help in shouldering your expenses and in building your business credit.
Small Business Credit Cards – Wonderful Financing Tools
You don’t have to be a big company to qualify for business credit cards. Nowadays, credit card companies have issued cards that are especially designed to meet the needs of small business entrepreneurs or home based enterprisers. Whether you own a small or big business, you can surely find a business credit card that suits your needs.
Can you apply for a credit card even if you’ve just started your business? The answer is yes. Even if you haven’t yet established a separate credit history for your company, credit card companies will still consider your application by taking a look at your personal credit. If you have a good to excellent credit score, you can have an easier time getting approved for small business credit cards with the best deals.
Nevertheless, if your personal credit score isn’t as impressive as you hoped it would be, you can still get approved for a secured business credit card. Secured cards are particularly designed for entrepreneurs who have a problem with bad credit. This business credit card is secured by submitting a certain amount of deposit to the card holder’s account. In fact, you can use a secured business credit card to start building your business credit.
How can business credit cards help with your financing demands? First, it frees up your available cash flow so you can save them for your basic expenses. Having a business credit card also gives you the assurance that you have a reliable financial resource in case of unexpected or emergency expenses. For start up businesses, credit cards are a great way to invest on the equipment you need without paying for them in cash.
Another advantage of using business credit cards is you can track your spending more conveniently. Aside from the monthly statements of account sent by your credit card issuer, you can also use the quarterly and yearly account summaries as references to your bookkeeping and accounting tasks. Many business credit cards provide downloadable account summaries which you can use along with your accounting software. These references will prove to be invaluable especially in filing your business taxes. By checking out the exact items you’ve purchases, you can easily determine which ones can be written off from your taxes.
As we’ve said, one of the most important uses of business credit cards is helping you build credit. How can you build a strong business credit with the use of your credit card? By staying within your credit limit, using your credit card exclusively for business purposes, paying off your balances in full each month and by promptly submitting your payments.
If you have a new business and are thinking of the best ways to manage your money, then maybe you should consider getting a new business credit card for your company needs. If you have a credit card for your business, it makes money management and purchase monitoring so much easier for your accounting purposes. This may mean that you will have to make extra precautions on paying bills on time and choosing the right trustworthy employees to use them, but in the end the advantage will be that you will have better records.
Having a new business card has several advantages. First, itemization of expenses is done automatically by the credit card company which makes monitoring easy for you. Second, you can prevent mixing personal and business money by using the credit card for purely business expenses.
Third, this is a good way to manage the expenses of the business and to control the purchasing that your employees will do for you.
Because of the transactions records that will come to your business regularly from the credit card company, expenses are easily traceable and accountable. Fourth, getting a business card will also help your business build up its credit history and credibility as an entity.
By creating and maintaining a good credit history for your company, you can be sure that banks will be more than willing to extend your business a good loan at low interest when that time approaches. Fifth, by availing of a company credit or store card, you can be guaranteed that many banks and companies will give you great deals and rewards whenever you use your card to purchase supplies and equipment.
If you are finding it difficult to obtain a business loc or other type of revolving credit facility then you may want to solicit potential angel investors, friends, family, or other private investors for capital. As has been the common theme throughout this website, the current economic climate has made it more difficult to obtain business loc as banks and finance companies have pulled back on their lending activities. If you find yourself in this situation, then you may want to turn to private investors (often called “angel investors”).
Angel investors and private investors can provide your business with a capital infusion. Unlike business lines of credit, these investors typically provide the capital in one lump sum in exchange for a percentage of your business. This is the draw back from raising capital from a private investor. You will have to provide some level of oversight, a percentage of your business, and a certain amount of control to your company to a third party. This third party may have drastically different ideas about the direction of the business. As such, if you decided to raise capital through private investment rather than a business LOC then you should hire an excellent attorney to make sure that you are not giving up a significant amount of your business in exchange for the requisite capital required.
One of the positive aspects to raising capital in this manner rather than obtaining a business LOC is that you will not be held personally liable for the capital should the business not succeed. This is, of course, assuming that the private investor is providing you with an equity investment rather than a private loan. Additionally, this investment will not appear on your credit report. In the future, should the business grow, you can then apply for business credit lines when it is more appropriate or when the economy has improved.
Read more: http://www.articlesbase.com/credit-articles/alternatives-to-business-credit-facilities-2304910.html#ixzz1d1vBGotQ
Just like a personal credit report there is also a business credit report for your business. There is plenty of free access to the credit report for your business which can provide you with important information you can use to make vital business decisions. You can also use DandB.com business directory for additional business resources.
An accurate report can help you to decide whether or not you want to do business with a certain company and possibly what price you can charge. You can access comprehensive financial information that will allow you to assess the level of risk there is in extending credit to other companies.
You will also be able to investigate credit risk factors to help avoid unforeseen surprises when reviewing current customers for credit increases and learn what to expect through review of a company’s historical business practices.
Having access to an objective business credit report can help determine how confidently you can make a decision on credit for a new customer or if you need to learn more about them before you extend credit terms to them.
Through UCC, or the Uniform Commercial Code, filings you can figure out what your creditor position is in relation to other creditors that may already be in line for collection on any given credit customer of yours.
If you dedicatedly monitor your business credit, you can always have access to the information available to you regarding how much credit your suppliers will extend to you, the interest you will pay, how much you can borrow from a lender, what your customers think about you, and how interested potential investors may be.
With the ability to monitor other companies’ credit reports, you can get a leg up by discovering past payment practices of prospective customers, your current client’s business conditions, supplier’s history with other businesses, what competitors are doing, and other business details that you deem important.
You need the ease, affordability, and convenience of being able to monitor your own and your competitors credit status and receive updates right to your email. Important information about the stability of a company is sound or if they are planning to go out of business. You should also know if they begin to get behind on payments or if your own credit report remains accurate; so you can maintain a positive cash flow environment.
Having free access to all this data is the key and can mean the difference between your business success or business failure and keep you out of trouble. I have a friend who owned a business several years ago and if she had had access to all this information she probably would still be in business today. She didn’t have this kind of access to other’s information and got seriously taken advantage of by more than one supplier and then discovered she had no legal recourse to do anything about it.
If she had had access to objective, accurate business credit report information, she would not have ended up filing for bankruptcy and spending the better part of the next decade digging herself out from under a pile of legal BS she had to deal with.