Odysseas Papadimitriou, CEO of CardHub.com
Small business owners are basically living in the dark ages. No, I’m not referring to the aversion many mom and pop stores seemingly have to the power of web-based marketing or even how tough it is to become successful in the currently gloomy economic climate. Rather, I’m talking about the fact that politicians and financial regulators don’t seem to think that small business owners are worthy of the same rights and protections as the general consumer population.
While the CARD Act of 2009 has proven to be a huge success – adding transparency and fairness to the personal finance industry – it doesn’t apply to credit cards branded for business use. That’s alright, you might be thinking; small business credit cards are just different, right?
Due to the hardships between 2007 and 2010, the banking industry has gone through a number of changes designed to get through the recession. With the economy finally regaining strength and stability, small business owners looking to realize their dreams or expand their horizons are understandably curious about how the banking industry will affect them. The good news is that solid ideas with a strong target audience are still in good standing.
Available Credit Sees Ups and Downs
Because of the recession, most banks felt the need to create a number of newer, stricter regulations, especially involving credit. Up to 2010, little credit was available as banks worked to make sure they could cover their own liabilities. In the intervening years, however, the economy has slowly but steadily become stronger.
So you have your new corporation or LLC formed… great! Now the next task on your list might be to build credit for it, but how do you do that?
In many ways, building credit for a new business is much harder than building personal credit. With the latter, there are a plethora of entry-level cards for students and people with no credit history. Unfortunately, you will be unlikely to find starter cards like that for businesses.
Pre and Post Recession
When starting a new business from scratch, there are several factors you need to consider from marketing materials and hiring employees to selling products and saving money, that your business’ credit could easily take a backseat on the priority list. However, maintaining your business’ good credit is extremely important when it comes to building a successful company.
What exactly is business credit?
As a small business owner, many responsibilities fall on your shoulders. And, as time is money, you probably multi-task to increase your efficiency whenever possible – such as when running errands and making purchases.
There’s nothing wrong with a little bit of multi-tasking to increase efficiency. But there’s one practice you’ll want to avoid – using your personal credit card for business expenses. Many professionals have done this at one time or another, so it probably seems like there’s nothing wrong with this practice but there are four clear advantages to keeping your personal and professional purchases separate. Continue reading
With so much information out there about small business banking, understanding the ins and outs of your business finances can be a headache at first. Adopting good banking practices in the first stages of your business can mean the difference between success and ending up wrapped in debt.
Business banking differs slightly from personal banking, so it is important you have a strong understanding of your financing options and how to keep track of your spending and investments. Continue reading