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The surge in applications for instant approval business credit cards has caused a dramatic increase in credit card usage among small business owners according to the 2009 Small Business Credit Card Survey.
Since April, the top TARP recipients cut their small business loan balances by $8 billion dollars. While traditional loans have dried up and lines of credit get cut, banks have decided to funnel more of their small business lending with business credit cards.
Even though some leading credit card companies like Advanta left the card business entirely it’s refreshing to see that banks like J.P. Morgan Chase card services launched four more cards specifically targeted at small-business owners. As these instant approval credit card offers enter the market to compete for your business it’s important for you to consider all the business credit card options and compare the costs to the benefits before you apply.
Here are just a few to take into consideration:
- Cash Back – Many cards now offer cash back rewards. For example Chase’s new InkSM Cash has unlimited cash back and accelerated earnings on its card. This is a great perk because it rewards you for spending on everyday business purchases that you do already. Make sure you understand what the card’s limitations are and read the fine print before you apply.
- Frequent Flyer Mileage – Getting frequent flyer or airline miles cards is a very popular perk for business travelers. Once you accumulate enough points you can redeem them for airline discounts or free nights at participating hotels. Make sure you know if there are any limitations prior to applying.
- No Annual Fees – Many cards now waive the annual fees. Keep in mind that your credit score needs to be strong to get these types of cards. However, if your business pays its balance in full every month then this is definitely the way to go if you can. In effect, if you pay your balances, you get the card for free.
- Zero Percent Balance Transfers – This can help you reduce your high interest debt. Be sure to never miss a payment or you’ll immediately lose your interest free terms and have to pay the full rate.
- Payment Reporting – Traditionally, the majority of the easy approval business credit cards in the marketplace report your payment history and revolving debt to your personal credit files and not to the business bureaus.
However, some companies have started to catch on to the new world of business cards like CSI MasterCard, JP Morgan Chase and American Express. They understand that it should be used for business purchases and any debt incurred should only report to business credit reports not your personal one. When you apply for instant approval credit card offers they check your personal credit report, but your payment history and debt report to the business bureaus. This is what every small business owner like you should demand from a business credit card.
One important catch is if your accounts become delinquent then these companies will report the delinquency to your consumer credit bureaus as well.
Finally, keeping liability strictly tied to your business can be accomplished with no personal guarantee business credit cards. There are less than forty of these types of cards available and you will need to have a strong business file in order to qualify.
With the growth in business bureaus, data suppliers, and business files across the country more and more companies will have to supply an ever growing demand of new cards that will have to measure up to the needs of today’s small business owner.
I encourage you to choose cards that will best serve the needs of your business while supporting the growth of your business credit file and limiting personal liability.