If you’re starting a new business, it’s important that you have solid cash flow. Only about half of businesses with employees last for five years, and one of the reasons for failure is the lack of cash flow.
Cash flow is what allows you to pay bills on time as well as meet salary requirements. When you’re first starting out, you may not be seeing as much income as you’ll eventually be able to take in. Additionally, depending on the type of business you run, you may have to wait for clients to pay their bills before you have money coming in.
This is why small business credit cards for new businesses have become very popular in the last few years; about 65 percent of small businesses use credit cards on a regular basis. They allow you to continue to function while cash flow is tight, and they also allow you to enable employees to make purchases without you having to be present or set up charge accounts.
If you’re interested in a small business credit card, here are some of the things that you should look for.
There are some cases where fees may be worth it, but in general, you should look for cards that don’t have high yearly maintenance fees. Additionally, a low interest rate is important. It may be a while before you are able to pay back a significant amount of what you owe, and fees and interest can quickly cause your balance to balloon. This is especially true if you’re only able to make minimum payments for the first year or so as you’re getting your business up and running.
Reward programs and benefits
While you generally want to avoid small business credit cards with high fees or maintenance costs, they can sometimes be worth it if the card offers a stellar rewards program. Along with offering certain benefits for using a card, like frequent flier miles, many credit cards are also offering rewards programs that allow you to get cash back, which is where you get back a percentage of what you spend.
Other rewards programs may allow you to get discounts with certain companies or retailers. Additionally, larger fees may allow you to take advantage of flexible payment options. You’ll need to figure out if the cost of having a card outweighs the benefits associated with it.
Depending on whether you’ll allow employees to make purchases on behalf of your business, you may also want to be able to add authorized users to the card. Charges will still go to your card and be your responsibility; it will not be the employees’. However, the ability to add authorized users will allow you to issue cards for individual employees instead of sharing a card.
Many creditors now offer a range of small business credit cards for new businesses, and they have different interest rates, fees and rewards. Finding a card that fits your needs can make a huge difference in being able to succeed with your new business.