business loans

By Jeff Hindenach

Getting a business loan is not always easy, especially in the current credit market. Many businesses are looking to business credit cards to help them fund startup costs when they are first building their business. So what should you consider when looking for a business credit card?

First, let’s take a look at why a business credit card could be beneficial. A business loan is typically the first choice for many small business owners, but a business credit card can often be a good supplement to the business loan. For example, it takes longer to be approved for a business loan than it does for a business credit card, so if you need to start your business right away, you can use a credit card for the upfront costs without the hassle of being approved for a loan.

“When we started our company in 2008, traditional banks were not amenable to lending to small start-up companies,” explained Ari Zoldan, the CEO of Quantum Networks, a telecom company that was recently on the INC 500 list. “Therefore, we were forced to use credit cards to obtain the cash we needed to purchase and turn inventory month after month.”

Also, if you are short on money when your bill comes, you can pay the minimum payment due on your credit card instead of being forced to pay the full monthly installment of a business loan. Sure, you’ll get hit with interest charges, but they will probably be lower than any penalties the bank throws at you.

Wade Benz, owner of, used business credit cards to help launch his business. Beyond the flexibility and ease of the cards, Benz also saw the protection benefits that they provided.

“As a small business you can also leverage credit cards to protect yourself if you purchase a good or a service that you are not pleased with,” Benz explained. “In some cases we were able to recover lost revenue when goods we purchased were not correct.”

If you are going to go the business credit card route, just beware that the same protections that consumer cards enjoy because of the Credit CARD Act of 2009 don’t apply to business cards.

“The CARD Act offered new consumer protections, but only to consumer credit cards,” Beverly Harzog, credit card expert and author of The Complete Idiot’s Guide to Person-to-Person Lending, explains. “For example, with consumer cards, banks can’t suddenly raise your APR without warning. So owners just need to be aware of that when they use business credit cards. They need to be vigilant about reading the mail and be on the lookout for changes to the terms of their credit cards.”

In my next post, I’ll share some of the best credit cards for small business.

Jeff Hindenach started his career as a journalist for the San Jose Mercury News and the San Francisco Examiner. He is currently an Editor with, a leading consumer and small business information website. He specializes in credit monitoring, legal services and security software.