If you have a new business you might consider secured credit cards as a path towards greater financial stability. A secured credit card is obtained by putting down a security deposit that is relinquished if the business defaults on the payments. Here we cover some of the ways that secured credit cards can help a new business gain a better financial foothold.
For Companies With A Poor Credit Rating
If a business has had financial problems in the past, its credit rating was likely affected negatively. A poor credit rating will preclude the business from accessing loans, credit cards or net terms on invoicing. Secured cards are a way for a business to obtain a credit card even if it has a poor credit rating.
For Companies With A Limited Credit History
New businesses will often run into the trap of being unable to obtain financial instruments that build their credit history because they haven’t yet built a credit history. Secured credit cards are a way out of this conundrum. By using the cards responsibly, a business is able to begin building a credit history where there was none previously.
A Stepping Stone To An Unsecured Card
After a period of responsible card use, depending on the issuing company, a business could be rewarded with a larger credit limit or an upgrade to an unsecured card. In the case of the former, the deposit would remain in place, but the card user would have access to a larger line of credit. With an upgrade, the deposit could be refunded or used towards any outstanding balance.
Access To Other Financing
Once a business begins to build a positive credit history, it will be able to access other financial instruments. Access to business loans, unsecured credit cards and net invoicing terms all rely on a good credit rating. Responsible use of a secured card can lead to the accessibility of these other means of financing.
Rewards Programs And Other Benefits
Some secured credit cards offer rewards programs such as cash back or points which can be more beneficial to a company than using cash, checks or other means of payment. Other benefits may include purchase protection, extended warranties and insurance waivers. Choosing a card with relevant benefits and rewards programs can contribute to a company’s overall health.
Emburse Credit Cards
If your business has a poor credit rating or a limited credit history, get in touch with Emburse to see if there is a credit card product that can work for you.