The Ultimate Guide to Business Banking

Easy access to credit can be a game-changer for business owners. A credit card increases a business’s purchasing power, helps even out the push-and-pull between accounts payable and accounts receivable, and can even be a lifeline in an emergency.

Read on to learn more about business credit cards, how to get them, and how to use them. 

It would be nice if business expenses and business income were perfectly in sync. If all expenses were due at regular intervals, and all clients paid their invoices promptly, accounts would be balanced and cash flow would be steady.

But unfortunately, things are a little more complicated than that.

Especially for suppliers or businesses that work on a contract basis, there can be serious lag between the date that inventory, equipment, or manpower are paid for, and the date that profits begin to roll in.

Acquiring a business credit card, also called a commercial credit card, makes it easier to maintain consistency throughout the business cycle.

Business credit cards are more than just a piece of plastic. Here are five benefits of a business credit card:

1. Convenience
   
   Business credit cards are convenient for the same reason personal credit cards are convenient — they eliminate the need to carry large amounts of cash for purchases. Additionally, business credit cards give you the power to make online purchases.
2. Protection
   
   Whether you’re running an established business or a startup, credit cards can add a valuable layer of security to your transactions. With a business credit card, you’re able to dispute fraudulent or inaccurate transactions. This protects you in the event of theft, and sometimes even lost or stolen purchases.
3. Ease of Cash Flow Issues
   
   Cash flow is always a top concern, especially for new business owners or seasonal industries. Business credit for startups and other small businesses gives you the power to make purchases now which will bring in cash later.
   
   Spending power means you’ll be able to take actions that fill your pipeline, ultimately resulting in revenue for your business.
4. Build Business Credit Score
   
   Like your personal credit score, your business credit score has far-reaching impacts on your financial situation. Acquiring a business credit card helps you improve company credit, which can result in lower interest rates, lower insurance rates, and a better chance at renting any property or equipment your business needs.
5. Rewards and Perks
   
   Look for a business credit card with reward points, cash back, corporate travel rewards, or other perks to make life a little sweeter.

Any business owner can apply for a business credit card. Most applications will ask for your Employer Identification Number from the IRS. However, in many cases, even sole proprietors can complete the application using their social security numbers.

You may be asked to provide further proof of your business ownership, so it’s important to be honest.

Securing a business credit card should be a simple process. Here’s what you’ll need to do:

1. Shop for the Right Card
   
   If you search for “best business credit card” online, you’re likely to come up with a lot of information. Maybe...too much information.
   
   You may be looking for the best startup credit card with low fees and no collateral required. Unsecured business credit cards for startups are available, but it’s wise to protect yourself by being wary of exorbitant interest rates.
   
   For the best rewards card for your bustling business, you’ll need to shop around. A great place to start is by asking your business banking partner if they have business credit card options available. If you’ll have employees using your credit account, ask about the features the lender offers for business expense cards.
   
   Note that while you may come across offers for your particular business, such as “best credit card for construction companies,” “best credit card for office supplies,”  “best credit cards for trucking businesses,” “e-commerce business credit card,” etc., you do not need to pick a card that is targeted to your industry.
   
   Instead, select the card that will offer the lowest interest and most valuable rewards.
2. Gather Information
   
   For easy business credit approval, you’ll need to provide some information about your business. You can apply for a business credit card with your EIN, your social security number, and financial information (which helps banks understand how much of a payment you can afford).
   
   In most cases, you will not be able to secure business credit with an EIN only. You’ll be asked to provide detailed information about both yourself and your business.
   
   If your business is a sole proprietorship, credit card lenders may not require your EIN but will still request other relevant information. A sole proprietorship can get a business credit card, but you may need to supply documentation that shows recent business activity.
3. Apply for Approval
   
   The business credit application process involves a look at your business credit history AND your personal history. Expect the lender to pull both reports. From there, your application will go to an underwriter. If any more documents are needed, you’ll be notified.
4. Make Payment Arrangements
   
   Ideally, you’ll pay off the full balance of your loan each billing cycle. However, if you are unable to, you’ll need to set up a payment plan. Automatic payments are great for busy business owners to ensure that you aren’t hit with late fees and negative items on your credit report.
5. Spend Responsibly
   
   Most importantly, be cautious with your credit card spending. Although it is an amazing tool to spend money on the items you need to MAKE money, things can become lopsided very quickly.
   
   Your goal should be to pay off the balance of your credit card as quickly as possible each billing cycle to avoid interest charges and a snowball effect on your business debt.

Vast Bank has several options available to anyone interested in acquiring a business credit card. Explore credit card options and choose the right business credit card for you.

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