For many entrepreneurs, the cost of scaling is daunting. But business credit cards for new businesses provide benefits that startups can leverage as they scale—from insurance for expenses and a line of credit to travel perks and cash-back rewards.
I spoke to three entrepreneurs whose savvy use of business credit cards provided the financial support, protection and benefits they needed to launch their businesses.
1. Get insurance and protection.
Business credit cards for new businesses provide insurance to help limit risk. Business credit cards offer protections that go a long way for startups with limited cash.
For Puneet Mehta, CEO of Netomi, an AI platform for customer service, the protection business credit cards provide is invaluable.
“We are constantly experimenting with new ways to grow and with that comes a need for rapid purchasing power," Mehta says. "Our business credit cards couple the freedom to pay for anything at the drop of the hat with the security of knowing that we'll be protected from fraudulent charges."
With a startup that relies on business credit cards to cover expenses at will, Mehta is able to trust that their purchases are insured—offering peace of mind so the team can put their effort toward growing the business.
2. Scale your business quickly.
Business credit cards provide coverage for startup expenses so new businesses can scale quickly. And business owners with debt can save on interest rates by taking advantage of introductory 0 percent APR offers.
Rukayatu Tijani is the founder of Firm for the Culture, a law firm designed to trademark social entrepreneurs' brands as they scale. After years as an intellectual property lawyer, she recognized a gap in the market when it came to protecting entrepreneurs and creative thinkers. She founded her firm to offer trademark services to underrepresented groups—but first she needed the right structure.
“I didn't want to get too big without the systems in place to make consumer experiences as efficient and streamlined as possible," she explains.
So Tijani leveraged business credit cards to help the business scale responsibly.
“My business credit card helped me quickly establish the capital to get third-party apps necessary for my business," she says.
Taking on debt was not a part of her plan, but she needed to cover big expenses in order to grow. By using business credit cards for up-front expenses, Tijani was able to scale quickly and responsibly, ensuring that she was providing the best level of service to her clients from the start.
Giving our employees access to a business card significantly reduces the amount of time we need to spend reimbursing employee expenses, which in turn frees up more time to focus on the other vital roles of growing the business.
—Puneet Mehta, CEO, Netomi
3. Travel for new business.
Businesses that require travel can enjoy travel perks, reward miles and other programs through their business credit card. Travel is an integral part of Tijani's business.
“I host workshops all over the country," she says. "With my business credit cards, I've been able to take advantage of mileage so I don't pay a cent for airfare.
“Using business credit cards fits into my overall strategy consistent with scaling," she continues, "allowing the freedom to grow by providing cash back on things like travel and food so I can spend responsibly."
4. Build your business' credit.
Establishing strong credit can be challenging for startups, especially those led by entrepreneurs without a strong credit history. For Flynn Zaiger, CEO of digital marketing agency Online Optimism, having access to business credit has opened up more financing options as his business matures.
“As a 22-year-old entrepreneur with extremely small assets and little capital to my name, traditional bank financing was limited," Zaiger explains. "The credit lines provided by credit card companies were super helpful to us. Cashback options provided us with an early, easy-to-use return on our investment."
To this day, the line of credit provides the security needed to maintain.
“In year seven," he says, "our credit cards provide us with the necessary line of credit needed to handle unexpected pauses in cash flow."
5. Use a charge card to control your spending.
Some business credit cards, like charge cards, require full payment at the end of each month, helping business owners control spending as they grow. This can be a tool to both monitor expenses and make processes more efficient.
At Netomi, entrusting employees with business credit cards is an integral part of streamlining the business.
“Giving our employees access to a business card significantly reduces the amount of time we need to spend reimbursing employee expenses, which in turn frees up more time to focus on the other vital roles of growing the business," Mehta explains.
With a small budget and big goals, startups can make the most of their funds by using charge cards to ensure they get what they need to scale while keeping a close eye on cash flow.
6. Get business-related rewards and perks.
Additional rewards are also built into business credit cards for new businesses. At my agency Tote + Pears, we use our business credit card for all client purchases. We've gained rewards like hotel stays, flights and cash, then use them as bonuses for our team in the form of team trips and cash bonuses. Rewarding our team ensures that our employees feel seen and keeps them vested in the organization as loyal brand ambassadors.
For entrepreneurs launching startups, more creative financing options can be an asset. Business credit cards offer flexibility and benefits that help cover costs while also providing protection necessary to limit risk while your business scales.
Read more articles on credit-card financing.
Photo: Getty Images