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Business Credit Cards Explained

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Major business expenses in Canada are handled through business credit cards that are granted to company executives to spend specifically on the business. This enables a distinction between personal and corporate use.

Having said that, you should understand that business credit cards are not obligatory, if you know how to differentiate between personal and business expenditure. With business credit cards in Canada, you have the flexibility to purchase required supplies for the company, pay for urgent products, for travel expenses and so on. When you use Canadian business credit cards, you can avail a number of free offers such as airline tickets and the very popular cash back bonuses.

Business Credit Card Application

While business credit cards are necessary in Canada, startup organizations do not find it very easy to obtain. One difficult factor here is that initially if you apply for a business credit card, the bills would have to be paid from your personal credit card, until your business is strong enough to handle the business card payments. This means that until the business card is not reported or filed with a major business credit database, credit card companies will bill the business credit on to your personal credit.

Problems with Business Credit Cards

Business credit cards are good enough mostly for executives who have a good personal credit record, because that personal credit will be supporting the business credit for critical times. Whatever financial crisis that the business goes through, your personal credit should be good enough to drive the business through the crisis. All this could lead you to losing business as well as ending up in debt crisis.

Understand the fact that when you use your business credit card in its initial phases, whatever debt incurred on that would also show up on your personal credit score. This could harm your financial reputation, and would make it even more difficult to obtain any further loans.

While the business credit card is meant to be used for the organization, it is signed by one single person who will be held liable for any issues with the card. In case the business credit card suffers, the person who signed the application will have to pay back the liability. During such a crisis, legal help should be taken without delay.

People using personal credit cards in Canada have the flexibility of getting help from the company when they give a “claim” for any defective product bought under the card. However, when business credit cards are put in use, then the credit company does not come in for any claims made. This is because the business credit card is not used by a single individual; rather it’s of an enterprise.

Small Business Credit Cards with Rewards

Though, the thought of getting good cash rewards might be enticing, think carefully. If your business is a small startup, it would be very difficult to get a fully functional business credit card.

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