Business Credit Cards and Business Debt – A Dangerous Combination

Business Credit Cards and Business Debt – A Dangerous Combination Linda Adams

Does your business rely on credit cards for working capital? A recent study conducted by the Ewing Marion Kauffman Foundation shows that almost 60% of small businesses relied on credit cards to provide funding for operation during their first year. The study concluded that reliance on credit cards to finance the early years increased the likelihood that a business would be in the 50% of startups that failed within 4 years.

Amazingly even a debt as small as $1000 made a significant difference in a company’s ability to survive past the 5 year mark. The pattern for credit card use show an increase in debt over the first 5 years of operation. It is those companies that start to pay down that debt by the end of their 4th year or so that are the ones to succeed. The extra burden of paying off the credit debt is often too much for some young companies who might otherwise have succeeded.

The increased use of credit cards for small businesses is a result of the ease in which cards were obtained even up to 2 years ago. They are easier to get than business loans or lines of credit… Of course there are many other factors that impact a business’ ability to make in these tough economic times, but the use of credit, even in small amounts, early on seem to take their toll.

<p>Unfortunately, the new laws that recently went into effect for personal credit cards do not impact the business credit card industry. This report reinforces the need for the same kind of reforms for the users of business credit as there are now for personal credit. As I mentioned in a previous Ezine article from June, if you use your personal cards for business and have more than a $25,000 limit with a high balance, your personal card may be viewed as a business card and exempt from the personal credit card laws.

Are you still using wither personal or business credit cards for your business? Are you able to pay them off or are you running an increasingly large balance each month? Keep yourself out of that 50% who go under by making a conscious effort to decrease you dependence on credit cards for things you can pay cash for. Work to decrease those balances and make sure you don’t lose your shirt!

Linda Adams is an innovative and seasoned facilitator/educator with more than 20 years experience designing and implementing programs for audiences of all ages. She is dedicated to helping others realize how important their credit is to every facet of their lives. Visit her websitehttp://www.cleancreditqueen.com for more educational articles and go to http://www.cleancreditqueen.com/navbar1/products.html for a list of products to help you take charge of your credit situation.

Article Source: http://EzineArticles.com/?expert=Linda_Adams
http://EzineArticles.com/?Business-Credit-Cards-and-Business-Debt—A-Dangerous-Combination&id=2893460

Business Credit Card Find the Perfect one for Your Business

How to Find a Perfect Business Credit Card For Your Business
By Chintamani Abhyankar

You may have a long banking relationship with your present bank and they can happily provide you with a credit card facility. However, it is good to make an assessment of your needs and look around for various options.

There is severe competition in the market of business credit cards. It is obviously to your advantage. Before you select a particular business credit card provider, look for the following points:

1. Your choice of payment – The offers from various card issuers differ on interest charges and fees. You should decide whether you are in a position to pay the outstanding balance at the end of the cycle in full. If yes, then you can select a charge card. Most of the charge cards will not have any spending limits. However, if you are unable to pay the balance within the stipulated time, then it’s a different story. Then you have to study the interest and penalty structure for different credit cards.

2. Taking the benefits of rewards – This will depend on the nature of your business. If you are traveling frequently, cards offering generous travel rewards will be good to you. There may be discounts offered by some cards on purchase of specific merchandise. AT&T Universal business rewards card offers extra points for each dollar spent on purchases at many office supplies merchants, at gas stations and for professional services.

3. Balance transfers – If you already have some credit card, many card issuers will provide soft terms for transferring the balance. The low rate of interest will be offered for initial period of about 6 months. This will be a good opportunity to get some temporary relief. At the same time, you need to check out the long-term rates also!

4. Welcome bonus points – Some card providers offer huge bonus points on joining them. These points can be redeemed for your business needs.

5. Free additional cards for your employees – Within the limits set for you, you can apply extra cards for your employees. This is very convenient if you want to give your employees this facility.

6. Acceptability of cards – Check out with your suppliers which cards they usually prefer. You may be using your card regularly with them and their preference is important to you.

7. Time taken for approval – You can get a decision on American Express cards within sixty seconds! This is not very important issue, but sometimes it helps.

You need to make an assessment of major cards in the market in order to find out which one suits to your needs. Remember, offers made by card issuers are available for a very short time and they change frequently.

Your needs may be different – you may be just starting your business or you may be expanding. Examine these options before deciding on a card.

Finance is a big worry for many small businesses. Business credit cards can provide a solution. But all cards are not equal in benefits. Which one suits to your business? How to select the best? Continue reading »

Accept Credit Cards for Online Small Businesses

When you are first starting your online small business it may be a daunting task to try and figure out which services to use to accept small business credit cards. I personally have used three different services to process credit cards; Merchant America, Paypal,and Google Checkout. I will tell you some my experiences with these three online payment processors.

It has been years ago since I have used Merchant America but they do require a Setup Fee and a deposit in a bank of their choosing.The only plus I can see about Merchant America is if you did allot of offline business, you could accept credit cards by phone, or in person. Merchant America gives you a cheesy website shopping cart system to use for setting up an online store ( I found it difficult at the time to figure out how to set it up). I will say that the cheesy free website does rank high on search engines.

The biggest problem I have with services like Merchant America is it requires you to have the ability and knowledge of how to secure your customers credit card information. You have to secure your computer, website, and any hard documents. How well do you trust your own employees?

When I first started out I solely used Paypal. I got burned because paypal put a freeze on my account with over $3000. There was no customer service to contact by phone, I could only contact them by email. Paypal’s customer service email was slower than molasses days turned into weeks into months. My final explanation from them was I was selling lingerie and that was against their terms of service? Paypal was in their infancy, and a competitor reported me. Needless to say at the time there where thousands of people selling lingerie on ebay with paypal. I eventually got my account unfroze. The whole point of me telling you about this experience is to let you know that you need a backup plan, or back up payment processor. I continue to use paypal because of its features.

You can set up a paypal business account for free, and if you need other services like a formal shopping cart or the ability to make sales via phone you upgrade to $20 a month plan. Paypal is international which is a plus. Paypal is like a bank in the since when the customer makes a purchase the money goes to your paypal account.You can then withdraw money from paypal to your bank account – the withdraw process takes up to 3 days. Paypal Merchants can also apply for a debit card that works just like a credit card against your paypal balance, with a 1% cash back reward system. You can also ship easily from your paypal account.

I absolutely love Google checkout. Google checkout is straight forward with the cheapest rates. Money collected via Google Checkout is deposited directly into your bank account. The downfalls with Google is that they are primarily USA based, and do not have any shipping options in their back office.

I touched on it earlier , but I want to clarify something about paypal and Google checkout. They both secure credit card information so you do not have to. Merchants never see the credit card number. You are just notified that you have been paid and they address you should ship the order to.

Secured Small Business Credit Card

The web is one place where all transactions need to happen on credit cards. It is because of these that maximum websites trying to sell their product has introduced the credit card payment option. Small business owners may find it difficult to introduce the option of credit card payment, but unless they do so there is very little chance they can enlarge their customer base on the web. The money transaction is complete within 7 days at the most. Sometimes small business owners take the help of third party processors who handle the complete processing of these businesses. This is always a good option for small business holders since they are likely not to have much cash flow at all times. The other option available is to opt for secured small business credit cards. However, these cards involve quite a high processing fee such as about $200 for a small volume account (standard fee schedule) and about $20 as monthly processing fee.

The relevant questions regarding secured small business credit cards are those ranging from what the thing is, how it helps expanding business and its differences from a regular credit card. These questions are no doubt, very pertinent ones, which you absolutely need to know all about before you apply for a business credit card. Hopefully this article will answer all of these questions.

Secured small business credit cards are those that allow the card holder credit against assets, both personal and business. The reasons why business men might have to choose it are: firstly, the record of the particular small business in question may not be all that good. So lenders, dealers and suppliers otherwise reluctant to allow credit to this particular business, shall feel secured to allow the same. Secondly, the business might be new and unable to establish a credit of its own by now. This phenomenon is too common now. Small business, with the help of secured small business credit cards would be able to develop a relationship of faith and confidence with the lender and increase its profit margins in business arena to accumulate capital. The cards help you in getting rid of any preexisting debts that one might have had, expanding your business, increasing your stock of inventories, etc.

The improvement of credit ratings or scores is a big advantage that secured small business credit cards can offer. Companies facing serious financial crisis including crucial loan shortages and bankruptcies can be successfully rehabilitated through the credit card. Suppliers and vendors are always more wiling to allow a business credit once they have to themselves the assurance of a secured credit card.

Secured small business credit cards offer the owner many advantages like credit rating improvement and facilitate trust between the proprietors and lenders, much of which has been dealt earlier in the article. It also helps a faltering business to regain much of its past goodwill in course of its career of transacting in the market. So secured small business credit cards are instrumental in restoring small businesses to their very best of functioning condition and improve them.