In the U.S., small and medium-sized businesses play a major role as important players in the economy: as of 2023, the approximately 32 million small and medium-sized businesses in the U.S. created about 50% of all private sector jobs.
Financing is one of the key challenges for small businesses. In particular, companies that are just starting out or are small in size may have difficulty obtaining financing from banks. Under such circumstances, SME credit cards can be an effective option as a means of raising funds.
However, small business credit cards have disadvantages as well as advantages. As the president of a small business, you should be aware of the following points when using a small business credit card.
Interest Rates and Fees
Interest rates for small business credit cards are higher than for personal credit cards. In addition, there are various fees, such as annual fees and usage fees. Check the interest rate and fees carefully before using the card.
Credit line
Credit lines of credit for small business credit cards vary depending on the size and financial condition of the company. If the credit line is small, you may not be able to raise the funds you need. Check the credit limit before using the card.
Payments
Small business credit card payments are generally made once a month. Failure to pay by the due date will result in late fees. Make a note of the payment due date on your calendar or other calendar item so that you do not forget it.
Unauthorized use
Small business credit cards are at risk for unauthorized use. If your card is lost or stolen, notify your credit card company immediately. Also, if you issue cards to employees, it is important to have clear rules of use.
Social conditions in the U.S.
Social conditions in the U.S. can affect the use of small business credit cards. For example, during economic downturns, businesses may experience a decrease in cash flow, making it more difficult to repay the card. Also, when interest rates rise, the interest rate burden on the card will increase.
When using a small business credit card, you should pay attention to the social conditions in the United States.
What to look for when choosing a credit card for your small business
There are many different types of small business credit cards. The following points should be considered when choosing a card.
・Interest rates and fees
・Line of credit
・Point redemption rate
・Ancillary services
Company size and type of business.
Summary
Small business credit cards are a viable option as a means of financing. However, when using them, it is important to be aware of interest rates, fees, credit limits, payments, unauthorized use, and many other factors. It is also important to pay attention to the social conditions in the United States.
The wise use of small business credit cards can facilitate financing and promote company growth.
