Business credit is basically credit from a business name which is associated with the business's EIN (Employee Identification/Market Credit) number. This is unsecured credit for the business, and obviously it's not related to you, or your social security number. With your business credit, you can acquire vendor credit cards, business credit cards, low-limit accounts from many leading retailers, and even fleet management and fleet maintenance discounts. There are other perks to obtaining business credit cards. Many lenders actually offer merchant cash advances on business credit, which can be really helpful in times of unexpected expenses.
As an entrepreneur, business credit utilization is one of the most important business tools at your disposal. Credit cards available credit reporting directly to the vendors, in most cases, limits the amount of debt that you'll incur-which means you won't have to file for bankruptcy to eliminate unsecured debt, which is at the root of a lot of business problems. You should also take the time to investigate available credit from vendors available credit reporting on your business credit utilization, to ensure that you're getting the maximum benefit out of your business credit utilization options.
High utilization limits are often associated with many cards that are offered by banks and other financial institutions: gas cards, store cards, travel rewards programs and many cards simply for the purpose of earning points or enjoying perks. While these may be beneficial to some small business owners, they are certainly not helpful for many entrepreneurs-especially those who want to expand and reap the benefits of growing their businesses. For this reason, it is critical that you understand how to use your business credit to grow your business. There are many ways to increase the available credit limits for your company and this article will discuss a few of those ways:
o Increase your business credit utilization limit through the use of merchant services. You can increase the available credit to a significant level with the establishment of a merchant account. While it's usually not possible to obtain a dedicated merchant account from your local bank or other lender, there are plenty of companies who will handle all of your transactions. With the help of a merchant service provider, you'll be able to pay less each month on your company credit card for purchases and transactions, which will ultimately make your business more profitable.
o Obtain short-term business loans from local banks and small lenders. These types of short-term business loans allow small business owners to obtain cash within minutes without waiting on weeks or months for regular bank approval. The small amount of time it takes to get approved for a regular bank loan can often be days or even weeks. This means that small business owners must have the money ready to complete unexpected tasks or meet payroll deadlines immediately. Short-term business loans can help business owners avoid these delays, allowing them to complete their projects or fulfill payroll quickly.
o Use the business credit card for smaller purchases. Business credit cards usually offer generous spending limits, so owners should use them wisely. Don't overspend! Instead, set a monthly limit for how much money you want to put on your card each month. And always pay off your entire credit limit before the date expires. Many credit card providers will automatically charge your account if you . . . . . . don't pay the full amount each month.
o Properly manage your credit utilization. When using your card to make large purchases, make sure you pay off your balances as soon as possible. By reducing your balances, you will also reduce your credit utilization rate (the percentage of debt you're responsible for). Keep in mind that creditors report all payments made to them directly to the credit bureaus. Therefore, keeping a steady balance on your card and paying it off regularly will ensure that your accounts are reported accurately by the credit bureaus. If you don't pay your balances off, they'll reflect as a negative on your credit report and may prevent you from getting future credit.
o Increase your current credit limit. Once you've paid off your balance or gotten a new card, increase your current credit limit. The credit bureaus count a higher percentage of your current balance when calculating your credit utilization rate. This means that increasing your current limit will help you climb out of debt faster and improve your current credit score.