Business Credit Card - Entrepreneurs Courted by Credit Card Companies

By Elizabeth Beecher

In the past, credit card companies did not care about courting small businesses and only provided cards to corporate executives. However, since many small business owners still do not use credit cards and since there are now millions of these entrepreneurs spending a great deal of money, credit card companies have determined that this segment of the buying population represents a major market for issuers of credit cards. Research done by SCORE nonprofit small business counselors, and Visa, indicate that only 21% of small business owners use business credit cards. Out of purchases made by small business owners in the amount of $4.7 trillion during 2005, only $300 billion was spent through credit cards.

Fortunately for small business owners, credit card companies are no longer lumping them in with individual consumers since they have realized that their financial needs are totally different from them as well as from large corporations. They are now aware that entrepreneurs do not use their credit cards in the same way as consumers but they also do not have access to capital like larger corporations do. Consequently, although small business owners may need credit, they frequently must pay by check since many of their suppliers do not accept personal credit cards.

American Express has long provided entrepreneurs with business credit cards and were in control of that aspect of the market for some time. However, they now find they have competition from companies like Discover and Visa. AmEx, whose credit card never had a preset spending limit, has responded to this competition by improving its Rewards Programs and adding desirable networking events for its members.

Discover came out with its first small business credit card last June. Their card offers credit limits of up to $50,000 and also provides quarterly statements that can be downloaded. In addition, small business owners can increase the credit limit on cards for their employees online. Those vendors who do not accept credit cards can be paid by purchase checks.

Visa is competing for business from entrepreneurs by linking debit and credit accounts to their business cards. They are also making an effort to convince more suppliers such as utility companies, vendors and landlords to accept their credit cards in the hopes of proving their desirability to small business owners.

Using a business credit card makes better financial sense than using a personal credit card even though a number of start-ups have used these cards in the past to get their businesses up and running. Carrying so much extra debt frequently hurt their personal credit scores. Some experts say that business credit cards are not routinely reported on your personal credit report and the rewards for using business cards are very good.

Even though credit card companies are seeking new business from entrepreneurs and it has become easier to obtain this type of credit, it is still important to keep your personal credit in good shape because while most corporate executives routinely receive their business credit cards through their corporations, business credit cards to entrepreneurs are issued on the financial strength of the individual small business owner.

There's often a lot of confusion about credit cards and which credit card is the best fit for your needs. All credit card companies have amazing offers - or so it would seem. When deciding on a credit card - read the fine print and make sure you know what you're actually signing up for.

Card Fusion has the information to help you decide which credit card is best for your situation. The Learning Center is an excellent resource when shopping for a credit card.

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