Many businesses, no matter how big or small, sometimes face cash flow challenges. Whether it is a small business getting started or one that has been in business for some time, having cash at your disposal is an important factor that determines whether a business can accomplish its goals or not.

Business Credit Cards vs Business Lines of Credit

Many business owners turn towards their personal savings to overcome money problems in business, and though it may have its advantages, it is not always the best way to run a business. A business credit card is one of the most convenient ways of quickly accessing financial assistance for short-term needs and to increase the purchasing power of the company, which can help when scaling a business. However, like any other thing, it also comes with a cost and must be managed effectively and efficiently.

A business credit card provides the business owner with easy access to a revolving line of credit that has a set credit limit, for the purpose of making purchases and withdrawal of cash. A business credit card also carries a small interest charge if the balance is not paid in full on time.

Advantages of a Business Credit Card

• Easier Qualification – Businesses that do not have good credit card history can usually qualify for a revolving line of credit with a credit card at their disposal.
• Convenience – A credit card can be the ultimate financing convenience. Business owners are easily able to access the funds for withdrawal of cash or for purchases rather than using cash or a checkbook.
• Online Ease – Nowadays, businesses make purchases online with vendors, contractors and suppliers. For online transactions, a credit card is the best option.
• Financial Bookkeeping Assistance – Using a business credit card, you can receive the monthly statements and some of the credit card companies also provide you with an online tool to help you with managing your account and expenses. It can make bookkeeping easier for you. It can also help you when conducting an audit or when taxes need to be paid.
• Rewards and Incentives – Many business credit cards offer the owner rewards for using the cards and can include discounts or special offers. Some of these card providers also offer cash back incentives.
• Tool to Build Credit – Using the business credit card responsibly by paying the bills on time or paying more than the minimum amount can help you in building up a positive credit report for your business. This, in turn, helps you become eligible for applying for a loan or line of credit at a lower interest rate.

Business credit cards are an option that business owners may consider when they look for financing tools and resources. Before applying for a business credit card, you should understand the credit card terms, costs and the benefits.

Advantages of a Business Line of Credit

• Cash Source with Control – A business line of credit helps the business with the money that it requires for accomplishing the business’s goals, like scaling a business. A line of credit is much more advantageous than an investor, as it does not require you to give up the control over your business. A line of credit also helps you to steer clear of your personal savings.
• Use – It provides flexibility to your business. Since a line of credit allows you to access the money when you need it rather than taking a large lump of money as a loan. The line of credit is a useful tool for managing the cash flow of the business efficiently.
• Builds Credit – Using a line of credit builds up a positive business credit history when you make payments on time.

A business line of credit helps the business to meet the short-term funding needs. Whenever the cash is needed it is there. By having access to the cash when you need it, you can take your mind off the money and focus solely on the business at hand.

Get a Business Card at First Alliance Credit Union

Having a business credit card or a business line of credit can help a business overcome financial obstacles. The business owners will no longer feel the need to ask for loans or money from family or friends, by using either a business credit card or business line of credit the owner can get through times of tight cash flow.