If you're thinking about taking out a small loan for your business, you may want to consider an alternative approach. Due to the myriad benefits they offer, business credit cards can be a much better option for your short-term credit needs.
4 Reasons a Business Credit Card Might Leave You Better Off
Where business loans can be seriously lacking in terms of perks and incentives, business credit cards offer a world of benefits that are both unique and rewarding. Before you take out a business loan, you should compare all of your options to find the best fit – and that includes considering business credit cards as well.
Want to know what business cards offer that make them a better option than a traditional loan? Let's dig in.
Save money with 0% APR introductory rates
If you need a short-term loan for your business, paying 0% interest is the best deal you'll ever find. Whereas 0% intro APR is unheard of among small business loans, however, plenty of business credit cards extend this benefit for a limited time.
The Blue for Business® Credit Card from American Express is one card that comes with this perk. Once you sign up, you'll score 0% intro APR on your first nine billing cycles. That's a full nine months to borrow money and pay no interest for the privilege. After that, however, your rate will readjust to somewhere between 11.49% and 19.49%.
The Bank of America® Cash Rewards for Business MasterCard® credit card is another business credit card that offers 0% intro APR for nine full months. Your rate will adjust to somewhere between 11.75% and 21.74% after your introductory period, but this card comes with no annual fee.
If you need to borrow money for just a few months at a time, signing up for a card that offers 0% intro APR at first is an absolute no-brainer.
Earn rewards that are geared for businesses
In addition to 0% APR introductory offers, some business credit cards allow you to earn lucrative rewards. The SimplyCash® Business Card from American Express, for example, lets you earn 5% cash back at U.S. office supply stores and on wireless telephone services purchased directly from U.S. service providers. Plus, you'llearn 3X points on another category of your choosing and 1X point for every other dollar you spend. And for a limited time, you'll even earn a $250 cash bonus if you spend $5,000 in qualifying purchases on your card within the first six months after your account is approved.
Have you ever seen a business loan that rewards its customers with cash just for being a customer? Probably not.
Earn points good for travel
Speaking of rewards, business owners who travel often can benefit handsomely from co-branded travel business credit cards. This list includes credit cards that brand with airlines and hotel chains to offer points that are redeemable with your favorite loyalty program.
With the Starwood Preferred Guest® Business Credit Card from American Express, for example, business owners can earn points that are redeemable for free hotel stays at more than 1,000 Starwood properties worldwide. And since you won't be charged a foreign transaction fee when you use this card abroad, this is the perfect card for business trips as well.
If you want more flexibility in the type of travel you earn, a card like the Capital One® Spark® Miles for Business might be a better fit. With this card, you'll earn 2X points on all purchases, and you can redeem those points for any type of travel with any hotel chain or airline without worry of blackout dates or capacity controls. Plus, you'll earn a sweet 50,000 mile bonus after you use your card for just $4,500 in business expenses within 90 days.
Score added benefits
As if all of these benefits weren't enough, some business credit cards offer additional benefits that can add to your bottom line. While these benefits vary, they include perks like extended warranties, auto rental coverage, price protection, and trip cancellation/interruption insurance.
The Ink Plus® Business Credit Card from Chase, for example, offers trip cancellation/interruption insurance, purchase protection that covers your new purchases for 120 days against damage or theft, extended warranty protection that extends the time period of the U.S. manufacturer's warranty by an additional year, and return protection that will reimburse you for returns when a retailer won't take a product back. While these benefits may not be worth anything if you don't use them, they are offered as a cardholder perk and are completely free as long as you keep your account open.
If you need a business loan for a very short amount of time, a business credit card is almost always a better option. Not only do business credit cards offer valuable incentives, but many come without an annual fee – or, at the very least, they waive the annual fee for the first year.
As always, however, it can really pay off to run the numbers. If you need a long-term business loan that lasts for several years, you may be better off with a traditional business loan with a low fixed interest rate.
Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.