A credit card is a tool that helps the user to make purchases and pay for them later. Yes, of course, it is easy and convenient. But can some start a small business with a credit card? Though there are credit cards for business purposes just like there are credit cards for personal usage, completely relying on a credit card to start a small business may not sound feasible. However, let us explore the options of using a credit card for financing a small business.
Credit Limit on Business Credit Cards
Each business credit card comes with a credit limit based on your credit profile. By successfully getting a business credit card with higher credit limit, starting up a small business won’t be a problem. You can get maximum of INR 25 Lakhs on a business credit card in India. It is absolutely a handsome amount to start a small business of your choice.
Additonal Reading: Why you need a business credit card
However, getting a required credit limit is a difficult task if you are unable to meet the eligibility criteria prescribed by the bank. Primarily, you should have the age limit set by the bank and other criteria could include, location, yearly income etc.
How Can Credit Cards Help Small Business?
With the higher credit limit, the benefits are plenty with the business credit card for small business. It is a convenient online tool that help manage all your business expenses. From purchasing inventory to keeping track of your business spends, a business credit card becomes handy during your accounting cycle.
Reward points and cashback help you save more as you spend. Travel convenience, discounts on dining, purchases, complementary lounge access etc. are additional perks that can significantly lower your costs.
Add-on credit cards to your employees help you provide them finance to carry out the business work and keep track of the expenses at ease. Moreover, expenses made on the business credit card can also be useful for taxation purpose.
Most of the credit cards come with the interest free period of up to 55 days which can help you manage your payment issues. With the fuel surcharge waiver, you can save a plenty if your company spends a lot on fuel transactions. The cards are chip enabled which facilitates a safe and secure transactions.
Business Credit Card for Self-Employed
While we have seen how business credit cards can help small businesses, it also important for those who are one-person companies or otherwise known as self-employed. A business card would be beneficial for this segment which include lawyers, doctors, writers (or should we say bloggers these days); literally anyone with a private practice and they need not wait for a bank to grant a loan and can make use of a business credit card with higher credit limit.
Additonal Reading: Business Credit Health Check, Its Importance and Benefits
Having a separate business credit card will help professionals also differentiate their business and personal expenditure and can keep a track of the same and besides business credit cards offered by Indian banks come with the benefits and rewards of a personal credit cards if not more.
Things to Consider
A business credit card works best for your only if your company deals most of the transactions online or at POS terminals. In case if you want to acquire cash through credit card by withdrawing from ATMs, it could get expensive as a specific amount is deducted as service fee.
Paying on-time is very important. Missing a single payment can lead to additional interest which can become lethal to your finance.
Whether opting for a business credit card to start a small business ultimately depends on your decision and circumstances. If you could not accumulate funding from anywhere, a business credit card could be your saviour.