There are many reasons why business owners turn to a business credit card. They offer rewards and business-specific perks, while also helping you build a business credit history. Some even offer introductory 0% APR promotions to help you save on interest.

It also offers merchants the financing they need when traditional lenders turn them away. Banks are often hesitant to lend to small businesses and startups; they simply lack the financials and history they want to see before providing them with cash. As a result, the business owners are left without a traditional source of financing. Business cards offer a quick solution.

But how do you know if your business really needs a business credit card? Or any form of financing? Here are some of the signs that extra cash would really help your business.

Business expenses are piling up

One of the biggest mistakes business owners make is mixing business and personal expenses. If you are currently using the same credit card for both, it is definitely time to consider a business credit card. Mixing expenses only makes your life complicated, especially when it comes time to do your accounting and taxes. You can actually use a personal credit card or a debit card to separate your expenses (it does not have to specifically be a business credit card). However, keep in mind that a business credit card does give you access to features and benefits that can simplify running your business.

You have a large expense to finance

It can be a big challenge to secure a business loan for a large inventory or equipment purchase. To complicate things further, when these needs arise, there usually is not a lot of time to sit around and wait to find out if you’ve been approved or not. A business card can help you quickly purchase the inventory or equipment you need and enjoy the benefits a business card offers. For example, an introductory 0% APR promotion, balance transfers and other savings.

You need to start building your business credit history

For some business owners bad credit is not the issue – having no credit is. Having a strong business credit history is a must if you want to expand. However, a business loan with favorable terms is not in your future if you do not have a positive or any business credit history. A business credit card can help you start building your credit right now. Handling your business credit card wisely and developing positive credit habits will help you build an excellent credit history.

Business cash flow is tight

Cash can get tight for a business anytime. In fact, sometimes you don’t even see it coming. The great thing about a business credit card it that your business does not have to be a certain size to qualify, or have an employer identification number (EIN). Having a business credit card on hand can help you when unforeseen expenses or situations arise, and you need some extra cash.

Not everyone is comfortable with using a credit card. If you prefer using another means of fast funding, consider an instant approval merchant account. Just like a business credit card, you gain quick access to a cash advance without having to wait on a traditional lenders’ long funding process (only to be denied). A merchant account, on the other hand, will also provide support for your business (e.g. chargeback protection programs) and fast payment processing solutions.
Before choosing a funding source, make sure you compare all of your options. The experts at First American Merchant are happy to help you browse your options, so you choose the right solution for your business type and industry.

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