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The traditional benefits of business credit cards have been established for quite some time, and one of the most important benefits is the ability to simplify the process of managing business expenses. Today, such a conventional advantage has become a baseline requirement of almost any business credit card, and as the industry and underwriting has evolved, so has the variety of perks that these cards can offer, especially to small businesses. In the COVID-19 era, small businesses have not only been struggling for capital, but also for access to credit–something that could be a lifeline in these trying times.
Let’s take a quick look at some of the emerging advantages of business credit cards and how they could be an invaluable asset to small business owners.
Thanks in large part to a significant change in demands and spending habits among consumers over the past couple years, credit card rewards programs are becoming increasingly creative and enticing. In the past, these programs were almost exclusively focused on offering rewards in the form of simple cash back or airline miles, but they have since expanded and often in delightfully unpredictable ways. Let’s say you’re passionate about investing, for example. Well, a credit card now exists that allows you to earn cash back when you shop with certain brands in your investment portfolio.
In very much the same way that rewards programs are being adapted to suit the modern preferences of consumers, they are also being reshaped to meet the modern needs of small businesses. With the rising prevalence of social media marketing, for example, businesses looking to offset increased spending can seek out business cards that offer cash back on advertising purchases. Similarly, businesses whose shipping costs have compounded due to the recent e-commerce boom can opt for a card that earns rewards based on the regularity of their shipping purchases.
Starting a small business or simply maintaining a company’s growth can have its challenges, particularly when it comes to cash flow. No matter how great or marketable your products and services may be, you know the saying: “You have to spend money to make money.” So, what will you do when the total price of the equipment you need turns out to be more expensive than you can currently afford? Or when your inventory gets held up due to a lack of payment? Of course, you could apply for a traditional loan, but that can be a drawn-out process, and you might easily get caught up negotiating terms and growing weary over liabilities and interest rates, all while your equipment or inventory gathers dust.
On the other hand, you could adopt a business credit card. In addition to boasting a much speedier approval process, many business cards today provide near immediate access to credit upon approval through the process of instant issuance. This is particularly the case with digital-first cards: businesses can simply access their funds and make purchases securely from a mobile device rather than waiting for a physical card to arrive in the mail. Moreover, business credit cards have considerably higher spending limits compared to personal cards, making them ideal for purchasing those much-needed supplies in bulk.
Expense management can be considered a more “traditional” advantage of acquiring a business credit card, but a variety of innovations in technology, as well as a growing emphasis on digital payment platforms, have taken this benefit to the next level. In addition to facilitating and controlling employee spending—say, in the case of a ride-sharing company providing allowances for gas or vehicle maintenance—modern applications and digital card technology work to streamline all associated processes, such as establishing spend limits, implementing security protocols, and keeping comprehensive records of all purchasing activity.
The increasing sophistication of expense management tools also makes it easier for employees and business owners to keep business and personal expenses separate. While business cards allowed for a reliable separation between the two, they did nothing to solve the monthly arrival of paper card statements and invoices, all of which needed to be manually sorted through and organized, often consuming a lot of time that instead could be focused on running the business. Today, not only do many business cards come with intuitive applications for viewing and tracking purchases, but they also utilize automation to ensure that business expenses are continually updated, and can be accessed and analyzed by approved parties at any given time.
Small businesses are the backbone of the American economy. There are nearly 32 million small businesses (with 61 million employees) in the U.S. and SMBs spend nearly $5.8 trillion each year. The advantages mentioned above only provide a brief glimpse into the upsides available to a small business acquiring a corporate credit card. And from now on, the sky's the limit.
* The Owner’s Rewards Card by M1 is powered by Deserve and issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.