A business credit card is a great way to manage your cash flow. If you need to purchase things for your business and the vendor doesn’t offer a tradeline, you can use your business credit card. You can also use it to cover purchases until you generate enough cash. There are many credit cards that offer rewards, cashback, and incentives for small business owners. When you open a business bank account, your financial institution may also offer credit cards. It’s important to note that business credit cards must be used wisely and paid on time. Late payments and fees can add up if you’re not managing your spending and negatively impact your business credit – and your personal credit if you had to personally guarantee the account. Business credit cards are not intended for personal use, but as a way to establish a revolving line of credit suitable for a growing business. You can start to build your business credit by forming an entity, getting an EIN number, opening a bank account for the new company, and establishing trade and credit lines with creditors. Once you’ve established credit history, your business may qualify for larger loans that can be used to expand or improve the business. This can include capital for advertising, inventory, purchasing equipment, and more.
Furthermore, small businesses owners should regularly monitor their business credit history and report any inaccuracies to the credit bureaus. Proper management is key when it comes to maintaining good business credit. Plus, knowing what options are available could help you get approved faster with fewer hurdles along the way.
Building credit as a new entrepreneur doesn’t need to be complicated; just follow these simple steps and stay on top of your game. Want even more details on establishing credit for your business? Download Magenta Edge’s e-book, A Step By Step Guide on Establishing Business Credit, for more helpful tips.