A business credit card can help get a small business off the ground. Having a business credit card at your disposal can help alleviate cash-flow crunches. While there are better forms of raising capital for your business, a credit card can obviously come in handy when a purchase is necessary and cash is tight.
There are drawbacks to using a small business credit card. One such drawback is the blending of personal and business finances. If you default on a business card, most lenders will require this be reported on your personal credit report. So if the business becomes insolvent it will seriously affect your personal financial record.
There is some hope though. You may be able to get the lender to waive the personal-liability component of the small business credit card. If you make a few payments and petition the lender, most likely the credit card company will waive the personal-liability clause. This is great news because if the business fails the debts on your small business credit card will not carry over to your personal credit report.
There is another drawback to a small business credit card. The business credit cards do not offer the same protection as a normal consumer credit card. For instance, if you have billing error, the credit card company can not list the disputed amount as delinquent. But with a business credit card they can. Also the credit card company will not step in to defend you if you purchase goods in poor condition with a business credit card. The credit card company will usually step in if you have a consumer credit card.
Basically you need a small business credit card if you are starting a business. Even though it has some drawbacks, you will want the business credit card in order to get money fast in a credit crunch. With some work, the business credit card can separate you business record from your personal credit records which is great.
