It’s easy to see the appeal of business credit cards if you’re a busy Small Business in need of working capital quickly, especially for everyday expenses like buying stock or equipment. That’s because no assets are required and it’s easy to qualify, even if your credit history is not well established. Plus, it’s pretty convenient, easy and speedy to get your hands on the credit.
However, business credit cards, like personal credit cards, must be used sensibly otherwise the consequences can be painful. It doesn’t take much for them to become another worry point for businesses trying to manage the ups and downs of cash flow. Here are the cons of business credit cards:
- Costly – business credit cards can be an expensive way to get short term funding and interest (which is usually high and can add up quickly if the balance isn’t paid on time and in full every month). It’s very easy to over extend financially by going over the credit limit and incurring late fees or penalty payments.
- Credit issues – late payment or difficulty in paying can add up to a negative credit report that is difficult to get rid of and can affect your ability to get other types of funding.
- Security – business credit cards can easily be used fraudulently if stolen or the number is copied. Employees can also take advantage of them too if use isn’t monitored or a clear authorisation policy isn’t in place.
Whilst you may be in need of credit quickly, a business credit card or an extension of your business overdraft isn’t the only solution. There is an alternative funding option that won’t require fixed monthly repayments – a business cash advance.
