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5 Ways To Use a Business Credit Card

September 2019 / Share
Credit cards can be used as working capital or startup financing for businesses.

Credit cards are a favorite financing option for regular consumers — and businesses can leverage them too. Indeed, there are a wealth of credit cards that are issued specifically for business purposes and which can help your company manage finances, make purchases, earn rewards and meet operational goals.

However, it's highly important to avoid relying on credit cards too heavily. The higher interest rates can mean you accumulate debt quickly if you don't pay down balances. To help, here are five smart ways your business can use credit cards:

1. As working capital

Cash flow can become tight during certain seasons or as a result of slow demand. If you don't want to take out a working capital loan or merchant cash advance, you can use credit cards to finance some parts of operations. One advantage is the flexibility with which you can use credit cards. It could takes weeks to negotiate and close a loan. In that time, cash flow could deteriorate or conditions may have reversed. Credit cards help businesses be responsive to their real-time financing needs.

2. To build credit

Eventually, you may need loans to finance the acquisition of new equipment, purchase of real estate or expansion into new markets. When you do, favorable rates and terms will depend on your business credit profile. If you use business credit cards responsibly — by paying down balances quickly and keeping a moderate utilization — you can improve your standing in the eyes of lenders. A good credit profile may also be a positive indicator for investors. 

3. As an accounting aid

Keeping track of transactions can be a hassle, but utilizing your credit card statement can help streamline things. Many credit card companies make online accounts available, which you can use to help keep books current and accurate. Apps often include other self-service tools that can help you better manage spending, accounting and transfers, like categorizing transactions by vendor or type of purchase.

4. To earn rewards

The potential to earn rewards is a huge advantage to credit cards. Businesses can get cash back or compile travel miles on each transaction processed. If your business strategizes the cards it maintains, it can maximize the value of rewards, as each card will carry different reward incentives. There is a card for each occasion, like:

  • Buying office supplies or paying for utilities such as internet and phone services.
  • Paying restaurant bills, which could come in handy when entertaining clients.
  • Making travel arrangements and expenses.

Be sure to research your options and rewards table or tier of each card. Some may have specific categories that revolve each quarter, or a blanked reward system for each dollar spent throughout the year.

5. As startup financing

Credit cards can also work as financing for startup ventures of growing businesses. While the tactic is a bit more risky, it's been pulled off before — by the likes of Google no less 3rd party Link Informaiton. The qualification standards are easier to satisfy, which is beneficial for entrepreneurs and young companies starved for financing. 

Interested in learning more about how your business can leverage credit cards? Reach out to your local Vectra Bank representative today for tips on the best cards and use cases.

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