Decision Finance Business Credit Cards

Is a Business Credit Card Right For your Company?
Business Credit Cards are one possible source for business cash. You should be sure that the specific need for the money is applicable and that the Credit Card borrowing is suitably structured. You can use several types of asset as security for your business Credit Card. Those acceptable to the lender will be based on the strengths and weaknesses in your balance sheet. Commercial Credit Cards have a variety of advantages over other forms of finance:

• Flexibility. A business Credit Card allows you to preserve your cash and working capital. The Credit Card funds can be used for almost any purpose including paying off current debts taken out at higher interest rates or a pending balloon payment.


• Retention of Ownership. You retain the current ownership of your company instead of raising funds by selling an interest in your company to an investor. The lender is only entitled to interest on its Credit Card, not a percentage of the profits or a share in the company that an investor would expect.


• Cash Flow Management. Business Credit Cards can provide you access to capital with minimal up-front payments and the flexibility to design a Credit Card repayment schedule suitable to your finances. You can protect your working capital by organizing your Credit Card schedule to match your payments with the projected cash flows from the proceeds of the funds.


• Budgeting. Business Credit Card schedules are fixed at outset, which means cash management is more predictable.

You should always consider the disadvantages of any financial action before embarking.

• Additional guarantees. Depending on the credit rating of your company, the lender might require additional guarantees. These may be provided by you, your partners or your bank and could affect your personal credit rating or your standing with your bank.


• Security. The lender may require you to provide additional personal assets to secure the Credit Card. Under a security agreement (for personal property), if you default on the Credit Card, the lender is entitled to apply to the courts for permission to foreclose upon the asset and sell it to repay the money owed to them. If you are required to provide security, try to limit the amount you have to give to secure the Credit Card. And make sure that when the Credit Card is repaid, the lender is obligated to release its mortgage or security interest and is required to make any government filings acknowledging this release.


• Defaults. The lender may define a variety of events that will constitute a default on the Credit Card, including failure to make any payment on time, bankruptcy, insolvency and breaches of any obligations in the Credit Card documents. Try to negotiate advance written notice of any alleged default, with a reasonable amount of time to cure the default.

Business Credit Card FAQ

What charges do business credit cards have?
Generally the lower the annual percentage rate (APR), the less your borrowing will cost you. A credit card provider should always quote their APR. It's the percentage rate that your borrowing will cost you each year, including all charges. The amount you might be charged will vary from 0% to more than 20% so it's important to be aware of the interest rates available in the market.

Some business credit cards charge an annual fee. The amount differs from bank to bank and on the type of card issued. Gold and Platinum cards often attract high annual fees, but can include a range of extras such as free travel insurance.

Ask your business card provider for a list of additional fees for non-standard services such as replacement statements. There may also be a charge if you make late payments or if you exceed your limit.

What is a Balance Transfer?
A balance transfer is when you move your balance from an existing business credit card, loan or overdraft onto another business credit card with a lower interest rate. Balance transfer deals are usually offered to attract new customers and last for a specified period of time, after which the interest rate reverts to the standard rate.

Applying for your Business Credit Card

When choosing a credit or charge card there are a number of factors to take into account. The card you choose should reflect the way you use your card account and the benefits you expect to receive from using the card. By answering a few short questions, Decision Finance will help you quickly sift through the various card offers currently available to find the account most suitable to your requirements.

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