These are challenging financial times. The days of walking into a bank and receiving a line of credit by simply applying are gone. At least for the foreseeable future. But you still need money and it’s time to explore alternative options. Today’s post is about a quick and easy method to obtain funding that you are going to initially shy away from. But read on. Business credit cards are a viable way to infuse cash into your business. Yes, they are “credit cards”. No, “credit card” is not a four letter word. At least not in this case.
Business credit cards are identical to personal credit cards with a few differences. As far as applying, the application is the same, except with a business credit card you must add your business information including your EIN. Your approval is still mainly based on your personal credit score but business information is taken into account. That’s it. Upon approval you will receive instant access to as much as $50,000.
You can use the funds to pay vendors, purchase equipment or supplies, even take cash advances. As a matter of fact, many business credit card purveyors are offering as much as 15 months of interest free money. Imagine. A $50,000 interest free loan for your business for as long as 15 months! Interest rates typically range from 7-15%. Here’s one other thing to think about. Just like you have multiple personal credit cards, you can do the same thing with business cards. Getting several hundred thousand dollars for your business is easily attainable. You can also do this yourself. NO broker fees involved! Google “business credit cards” and you’ll find several dozen available.
But it is a credit card you say. Carrying balances on credit cards can have a negative impact on your credit scores. Yes, that’s normally correct. But here’s the anomaly in the system. Business credit cards DO NOT REPORT BALANCES TO THE CREDIT BUREAUS! That’s right. You can max out a business credit card and it will not adversely affect your personal credit score. This truly is a business loan. We’re simply utilizing a different vehicle to deliver the money.
My research has shown business credit card vendors look for a specific set of criteria. Yes, you can get money this way if you’re a start up. Yes, if you don’t meet the exact qualifications, you can still get approved. Your card limits might be lower but you’ll still get some cash. I like to counsel people to meet the following criteria. That way there is no human involvement. It’s a computer generated approval and you don’t have to worry about convincing an underwriter. In order to get approved for larger amounts, your application should include the following minimums:
- Be in business at least one year
- Have an employee identification number
- Have gross revenues of at least $285,000
- Have a personal income of at least $60,000
- Have a personal credit score of at least 700
- Have a low credit utilization ratio on your personal revolving debt.
If you don’t meet these qualifications exactly, you can still get approved. It may just be for a smaller amount. Use the credit wisely and you will get re-evaluated after 180 days and could get approved for more.
If you need to get more than $50,000 you can surely apply for more than one business credit card. This is called card stacking and there is an exact way to do it. Credit card companies report inquiries to the credit bureaus almost instantly. Typically within a few hours. Always within 24 hours. Therefore you must plan if you are going to stack cards. Research thoroughly the cards you want. Have the website URL’s at your ready. Apply for one and immediately apply for the other(s). Do this all within an hour. The only way this will have a negative effect on your credit are the inquiries. You will receive a hard inquiry for each application.
I like to recommend business credit cards to my clients for several reasons.