When first starting a business, many entrepreneurs begin using a personal credit card for expenses. It’s the path of least resistance.
However, once the business starts to thrive, you will garner tangible benefits from using a good business credit card — i.e., a credit card in your business name that is used strictly for business purposes.
Here are advantages that a business credit card can offer your business to help it grow and be profitable.
1. Expands Your Overall Available Credit
If you have ambitious dreams to grow your business, your growth may be stymied by using personal credit cards for business purposes.
Why? You may have less credit available for family purchases because you’ve already used that credit for business purposes — and vice versa.
Having a separate business credit card and separate personal credit card, each with its own credit limits, can give you more potential credit overall for your business and for your family.
2. Establishes Business Credit History
Having a business credit card helps you establish a separate credit history for your business.
Small businesses often get turned down for loans or get disadvantageous loan terms because they lack a credit history for their business. According to Tom Gazaway, founder and CEO of LenCred.com, “from the business owner’s perspective the importance of business credit has increased in recent years and all the indicators point to this trend continuing in the years to come as well. It does depend on the type of financing you apply for but the level of importance of business credit is clearly increasing.”
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