Lots of small business owners need credit to properly run their businesses.
From day to day supplies to managing your business's cash flow using credit terms offered with a business credit card, the benefits of having access to this type of business credit can have a huge positive impact.
It won't be long after you've filed your business license paperwork and opened a business bank account, that the loan applications will come pouring in offering you a chance at a business credit card.
This is where things can get tricky, because not all business card applications are actually for a true "business credit" card.
Here are the top 3 things to avoid when evaluating business credit card applications.
Avoid Personal Guarantee's When you look at the application, take a look at the bottom area where it asks for business information and details.
If there is a section that is marked as "required" that asks for your personal social security number, then the application you have is for a personal credit card with a business name added to it; not a true business credit card.
Watch For Outrageous Rates Many credit applications look great at first glance, but when you look into the fine print, you'll find that they charge interest rates that are at times 4 times the prime rate.
These are a sure way to get caught in the credit trap of being stuck with high-interest debt that will drain the capital right out of your small business.
Never Pay For An Application Fee Reputable companies that extend credit and loans to small businesses know that they will make their profit from you being a loyal customer and by the interest rates that they charge for the loans.
Any company that tries to tack on an application or processing fee in order to open an account for your business is just trying to take advantage of you, and you should move on to businesses that will treat you better.
Getting a business credit card can open many doors financially for your small business.
Knowing how to avoid these mistakes before hand can be the difference between having business credit success and falling victim to the companies that try to take advantage of small business owners.