Businesses Applying for Business Credit Cards Without Credit History

When you are new in the business and you have not yet built a good credit history, issuers of business credit cards will most likely require you to personally guarantee your application for business credit cards. This requirement for a business credit card application may be annoying at times, but the reality is that unless you do so, the chances of obtaining new business credit cards, are next to nothing.

There are a few things you can do, to obtain a business credit card despite a lack of credit history in your business. For one, make a point of getting your business registered with the credit reporting bureaus; the most well-known among these being Dun & Bradstreet. You are familiar by now with the reports on personal credit issued by consumer credit bureaus. This is essentially the same thing that Dun & Bradstreet will do for your business.

Since you are new to the industry, and because your business credit is linked to your personal credit as an interim measure, you need to have a solid personal credit history to crack the nod from issuers of business credit cards. When you decide to apply for a business credit card, it is important that you ensure the accuracy and quality of your credit history.

Naturally you will greatly improve the chances of getting your application for a business credit card approved if you approach the bank where you already conduct your business affairs – unless of course, your record with your local bank is less than perfect. If this is the case, you can try applying for a modest line of credit instead of a business credit card. The bank might ask you to deposit a certain sum of money as a kind of security for the credit line, and when you have proven yourself to be a good payer and a responsible borrower you will be in a position to proceed with your application for a business credit card. At that point, the bank will be more inclined to approve a business credit card for your business.

As a new entrepreneur on the block, your business credit cards will most likely come with higher interest rate. The interest rate should not deter you from using your new business credit card though. Instead, the moment you receive your business credit card, you should begin charging to your business credit card the everyday purchases you make for the business; and when the statement comes, make sure you pay off as much of the business credit card balance as possible. If you want to save money, pay off everything so that there will be no interest; if you want to give the bank a chance to earn money from your business credit card, carry a small balance into the next billing period.

The sooner you begin building your credit on the business side, the earlier will you be able to pull out from the personal guaranty you have extended. When your business has established its own credit history, do not forget to call the business credit card issuer and arrange for appropriate changes in the terms of your business credit card agreement.

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Compare and Contrast – Taking Advantage of Business Credit Card Offers

The usual plethora of credit card offers that flood the advertising schedules has been noticeable by its absence this year, as credit card companies worry about continued exposure to potential ‘bad debt’ from consumers. But business credit cards are a different category, and something that many small and medium size businesses rely on to get them through lean months. Many SMEs utilise business credit cards as part of their financial organisation, and the Federation for Small Businesses is calling for a cap on credit charges to help struggling businesses this year.

“A cap on interest rates will at a stroke not only reduce business costs but give consumers a real boost and cut the cost of borrowing,” says FSB national chairman John Wright. He believes that small and medium size businesses will play a pivotal role in driving the UK economy out of recession and onto the road to recovery, but the interest rate charged on many business cards could scupper some businesses chances of being part of that recovery. According to the latest FSB figures, 23% of entrepreneurs use a business credit card to finance their business, but a worrying 26% use personal credit cards instead. This could cause a business problems in the long term, as it becomes difficult to separate business from personal expenses and exposes the cardholder to personal liability of the debts of the business and a potentially poor personal credit rating.

So perhaps this is the ideal time to start looking at business credit card transfers in much the same way as personal credit card transfer options. A business credit card works in a similar way to a personal card, giving the card holder a period of interest free credit, flexible payments and a much easier accounting system, with purchases and expenditure being listed on one, detailed statement instead of a disorganised wad of receipts. Like personal cards, business credit card suppliers are also anxious to tempt new customers with balance transfer offers, providing customers with the same options to ‘card jump’ as personal credit card holders. For a business this may help cash flow in lean months, particularly in the traditionally slow business months of January and February.

An alternative to the business credit card is the business charge card, which offers the same amount of convenience and flexibility as a credit card. However, with a charge card the balance often has to be paid in full at the end of the month by direct debit, so a charge card can offer a short-term solution to cash flow issues at best. It also has to be remembered that business credit cards often have an annual fee attached (sometimes hundreds of pounds) so this amount has to be taken into consideration when comparing and contrasting the cards on offer.

January is the ideal time to look at transferring to a new business credit card to take advantage of attractive offers that may not be repeated later in the year. It is also the time when many businesses are sitting down to take stock of their financial position and prospects for the remainder of the year, and so is an opportunity to examine the business credit card deals on offer. The competition between business card providers is fierce, with many including ‘reward schemes’ and other tempting sweeteners to get businesses to swap allegiances. The benefits of business credit cards are obvious – they allow the business to have a separate ‘slush fund’ of financing that can be easily controlled and monitored, no matter how many card holders are using the account. Business credit cards also give SMEs in particular another valuable commodity – time. Time not only to balance money in and money out (ensuring suppliers are paid on time and maintaining other lines of credit), but time saved on accounting and administration.

“2009 must be a year of action for small businesses,” says John Wright of the FSB. “The Chancellor and the Government can and must take a very serious look at capping interest rates charged on credit cards,” he adds. If the credit companies take notice of this then credit card charges could stabilise, leaving businesses in a much stronger position to be able to ride out the recession. It could also lead to a greater flexibility in credit lending for SMEs and avoid the knee-jerk reactions of the banks and credit providers seen in previous downturns. All of this means that now is the ideal time to look at business credit cards transfers to take advantage of the best deals, while they’re still on offer.

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