12
Dec

Real Business Credit Card Facts

This article was published on banking.about.com titled Business Credit Card Facts. The ‘facts’ listed might be true in some cases, however simply making sure your business is set up the way lenders want to see a company will prevent you from having to sign a personal guarantee.

Using a business credit card can help you manage your business and build credibility. Because it’s an important move, make sure you know the challenges. Let’s review key points you’ll need to know before you apply for a business credit card.

Business Credit Cards and Personal Credit

If your business is new, you don’t have a history of using credit or paying suppliers. To get a business credit card, you may need to personally guarantee the loan. Your personal credit will be important in the approval decision, so you need good credit.

What is Credit?

A business credit card will have the business name on it, so you’ll appear legitimate. However, without collateral or a history of business borrowing, the business credit card is intertwined with your personal credit.

You’re Not a Consumer

Business credit cards may carry more risk than you’re used to. As a consumer, you get protection (within limits) against unauthorized spending and changes to account terms. Unfortunately, business credit card holders don’t enjoy as much protection.

You’ll need to watch the account closely to limit your risk. You should also be prepared to find alternative credit sources.

Cash Flow, Not Capital

A business credit card should be no more than a tool to manage cash flow. Some people start businesses with nothing more than “a credit card and a dream.” This is a risky way to use a business credit card.

If you use your card for long term funding needs and carry a balance, things better work out (and they might). Interest rates on business credit cards are higher than other funding sources, so you should only use cards after other options are eliminated. Consider lines of credit, peer to peer lending, and any other loan you can get for longer term capital needs.

No Personal Use

Only use your business credit card for legitimate business purposes. If you use it for personal use, several things can happen:

You may open yourself up to more personal liability, even if you’re incorporated
It’s harder to track expenses
You might not be able to build business credit (and move away from using your personal credit)

12
Dec

Business Credit Cards are Not Complicated

The article below was published by USNews Money.

The New Complications of Business Credit Cards

In case you didn’t know, May 12 through 16 is National Small Business Week. This new age “holiday” is perhaps best known for the festive discounts that consumers are afforded at small businesses nationwide, but it’s about much more than that. Small Business Week is also about paying tribute to the so-called backbone of our economy, and doing so is more important than ever given the way small business owners have been treated in recent years.

The past few years have been dictated by economic events and our reactionary efforts to correct them. The Credit CARD Act of 2009 represents one of the most significant such efforts, as it drastically overhauled consumer rights and increased transparency in the credit card market. The law eliminated predatory pre-recession tactics like bait-and-switch pricing, double-cycle billing and the assessment of oppressive penalty fees. Its effects can be seen in a $6 decrease in the average late fee, a near-elimination of over-limit fees and a 2 percentage point drop in the overall cost of credit from 2008 to 2012, according to the Consumer Financial Protection Bureau.

Unfortunately, small business owners weren’t invited to the party. The CARD Act only applies to general consumer credit cards, which means the 30 percent of small business owners who use credit cards to finance company operations each year are susceptible to some shady terms and conditions.

Where’s the Legal Love?

The most significant CARD Act protection that small business owners do not enjoy is the rule against arbitrary interest rate increases. An ordinary consumer now has to be at least 60 days behind on his or her payment for a credit card company to raise rates on their existing balance. Issuers can increase the cost of small business debt whenever they want, however.

That, as you might expect, presents a number of problems for the plastic-wielding small business community. For starters, it’s impossible to allocate capital, control margins or plan an expansion when you don’t know how much your debt is going to cost at any point in time.

Compounding this issue is the fact that small business and personal finances are one in the same in the minds of major credit card companies. All the major issuers hold small business owners personally liable for any unpaid balances, and most report business credit card account information to users’ personal credit reports. Small business owners must therefore take their families into account when deciding whether or not to carry a balance on business plastic.

Looking for Signs of Change

Common sense would seem to indicate that an extension of the CARD Act to the small business community is only a matter of time, considering the close ties between personal and business finances and the amount of lip service that politicians pay to small business owners.

Unfortunately, the Small Business Credit Card Act of 2013 has a 1 percent chance of being enacted, and the issue of equal credit card rights seems to be losing momentum overall. While a number of major issuers took it upon themselves to proactively extend key CARD Act protections to their small business credit cards in the first couple years following the law’s passage, no significant changes have been made in the past two years.

Bank of America continues to be the most small business friendly credit card issuer by a wide margin, as it is the only one to have given business card users the CARD Act protection against arbitrary interest rate increases. Most major competitors lag far behind, having extended only a couple relatively rudimentary aspects of the law.

Making Do In the Current Environment

Small business owners these days have a couple options as far as their company credit cards are concerned. On the one hand, they can use a single Bank of America credit card for all business transactions. The Bank of America Cash Rewards for Business MasterCard is currently the best offer for that option, giving users 0 percent interest on new purchases for the first nine months as well as 3 percent cash back at gas stations and restaurants, 2 percent at restaurants and 1 percent everywhere else.

The other option is known as the Island Approach. It entails using multiple credit cards, each designed to provide the best possible terms on a certain type of transaction. For small business owners, that would mean getting a business rewards credit card for everyday purchases and a 0 percent general consumer card in order to safely carry debt from purchases you cannot pay off in full within a month’s time. The beauty of this strategy is that you’ll have far more options from which to choose (not just Bank of America credit cards), and you have the freedom to get two cards with excellent terms, as opposed to a single card with mediocre terms across the board.

12
Dec

Is a $150,000 Unsecured Credit Line Really Possible?

Brand new start-up businesses with no financials can qualify for a credit line up to $150,000. There are NO financials required, the lender won’t even look at your monthly revenue.

For this program all that is needed is a 660 credit score or higher to qualify. Personal credit, and only personal credit is used to qualify. The better the personal credit, the higher the credit line approval will be. You can even use someone as a Personal Guarantor who does have good credit if you have credit issues now.

This is the best account in the country for new start-up businesses and new franchises as you don’t need any financials to qualify. The credit line is revolving, and you can use it for any purpose. You will receive a debit card, even a checkbook so you can write from this account.

It only takes 2-4 weeks to close and have the money in your bank account.

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