Category Archives for "Business Credit Cards"

Business Credit Cards For Melbourne Small Businesses

What is a Business Credit Card?

A business credit card is simply a credit card that is used for business purposes rather than individual’s personal use. They are available to many business types and sizes. Aside from everyday use, they aid businesses in building a credit profile in order to improve the future credit borrowing terms.

Business Credit Card Application Process

In most cases, business credit cards are offered by many lending institutions. Their application process is much similar to that of a standard credit card application. The application by business borrowers can be done with or without an employer identification number. This makes it easy for all business types to obtain a business credit card.

In order to obtain a business credit card, you must complete an application. Their application is easier compared to non-revolving business loans due to the fact that the process is automated with an immediate credit decision. Also, they come with numerous added benefits. Due to this, business credit cards have slightly higher interest rates compared to traditional loans. However, credit card debt is usually unsecured, and this raises financing costs because of the higher risks for lenders.

Business credit cards can be applied with an employer identification number in case a business borrower has one or even use his personal social security number. The lenders majorly base their underwriting analysis on the information included in the new credit card application. In most cases, businesses are not subjected to minimum requirements required for credit scoring, income, and revenue analysis so they must depend on the backing of a personal guarantee. A business card provision is a personal guarantee that holds the person applying for the credit card liable for card fees and payments.

Advantages of a Business Credit Card

1. Easy qualification

Qualifying for a business credit card is much easier compared to a bank loan. If you have a small business that is well established or reasonable personal credit, then most credit card organizations will be happy to extend the credit card for your use.

2. Access to easy financing

If you are running a small business, then you will need access to cash for daily operations. However, lack of enough cash will bring some challenges during the purchase of items. In this case, a business credit card will come in handy when you need equipment, business supplies or even capital improvements.

3. Rewards

Most credit card companies offer incentives and rewards for using their own business credit cards. You can earn cash, airline miles among other rewards for making purchases using your business credit card.

4. Build credit

It can help you in building and improving your business credit. This can be advantageous if you apply for any bank loan in the future.

Downsides of a Business Credit Card

1. Personal credit issues

Majority of the business credit cards need a personal guarantee, meaning that you must give out your social security number as well as previous credit history to qualify. However, this can bring some issues for your personal credit along the way then credit companies report your business activities on the personal credit, or even become liable for over extended or late credit.

2. High priced financing

Financing purchases through business credit cards are very expensive. This is because you end up paying some higher interest rates, late fees and also high annual fees to have the card.

3. Less purchase protection

If you use a personal credit card, then most credit organizations will provide purchase protection. However, this protection is not the same when it comes to business credit cards. This brings more difficulties when returning purchased goods, reversing fraudulent charges and even correcting billing errors.

4. Security issues

The use of business credit cards includes the possibility of some fraudulent charges, especially from a stolen card number. Ensure you keep your credit card safe and also be careful about how you provide your card number online.

Business Credit Card Interest Rates

Business credit cards have interests rates that vary from one bank to another and one card to another. Majority of the lenders offer a wide range of business credit that is aimed at different business types, and some credit cards have specific eligibility criteria such as minimum turnover.

Top companies that offer business credit cards in Australia

  • Bank of Melbourne at a purchase rate of 9.99% and an annual fee of $55
  • Bank west at a purchase rate of 11.99% and an annual fee of $99
  • Newcastle permanent at a purchase rate of 9.99% and an annual fee of $55