How to Get a New Small Business Credit Card

When you set out to get a new small business credit card, you should focus on getting the right options for your business instead of just taking the first card that presents itself. Ensure you can afford your line of credit while also making sure the credit line is large enough to accommodate your business. Use these tips to determine which card will work for you then set out getting that card.

Incorporate Legally

You cannot have a credit card in the name of a business until it is legally founded. You do not need to form a corporation every time; in many states, you can set up a business name without incorporating your business. The bottom line is your business needs to have a legal identity before a credit line can be extended in its name.

Avoid Using Personal Credit

Many creditors will offer credit cards if you are willing to supply a personal credit report. By putting up your own assets and reputation, you can get a card for your business. Unfortunately, in this case, you are risking your personal assets in order to get your business financing. It is far better for you to keep your personal finances separate from your business. In this way, if the business suffers, you can maintain your personal good credit. When you first open your business, your personal credit may be the only factor a lender may consider. Once you have been in operation for a number of years, however, your business will have its own financial profile to stand on.

Supply a Business Asset

One option to secure a business credit card is to place an asset in exchange for the loan. Any business asset will work. In fact, you can use a personal asset, but you may run into problems as previously discussed. It is best to put down a business asset such as machinery, computers, real estate or another object of value. You can obtain a line up to the value of the collateral, and the lien on the collateral will go away if you pay down the card and close it. Unfortunately, in this case, your business is taking on added liability. This can harm your financial reports. Where possible, it will serve you better to use an unsecured card.

Look for Unsecured Cards

An unsecured card does not require collateral on your part. As a new business, you will likely find many offers come your way for new credit cards. Even without collateral, many lenders will be willing to loan you money. Look for those cards that, despite not requiring collateral, keep relatively low interest rates. The interest rate will depend on your business credit; therefore, "low" is a relative term. To determine which rate is "low" for you, shop around. Get quotes from at least three lenders. All other factors being equal, take the card with the lowest rate. However, not all factors will be equal in most cases. You should also look for the highest business rewards, the lowest mandatory minimum payments, and the most flexible payment schedule.

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