Credit Cards
Credit cards can be acquired from a variety of sources. Credit cards are not strictly limited to commercial banks, but are frequently an integral part of a bank's lending portfolio. Businesses can use credit cards as a substitute for a working line of credit.
Banks have become more aggressive with their marketing campaigns as a result of the changing banking environment. The changes have forced most institutions to look for new sources of income. The banks have expanded their scope of financial products to meet the changing environment and demands by customers. One of the new financial products is the small business credit card.
Banks aren’t the only ones getting into the game. The major credit card issuers (such as VISA, American Express, and MasterCard) now have small business credit card programs. When used as a source for working capital, revolving credit cards offer a hassle-free, quick source for limited funds. The main drawback of the small business credit cards is that the price of convenience is costly. Usually the interest rate for the credit card is typically a little lower than the regular rate for cards issued to individual consumers. Small business credit cards will almost certainly have a limit that is no more than $20,000.
Banks use several marketing tools to make credit cards seem like a good option for small businesses. They usually add credit cards with additional products/benefits such as discounts for rental cars, hotels, and gas. Banks will also offer travel insurance, warranty extensions on purchases, and deals on an assortment of insurances. Banks will want to see your personal and business credit history when you apply for the cards. If your credit history is not satisfactory, they will probably want a personal guarantee for the small business credit card.
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