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Posts Tagged ‘business credit accounts’

Now that you have your business and are economically active agent, surely you have to do different transactions and payments related to your business. These payments, how do you do? Do you use your checkbook personal or business credit accounts? Do you know the benefits that your company is subject to credit?

If the payments you are making your company with your personal checkbook, you’re probably missing out good opportunities for funding that may help buy supplies, pay your payroll and even the renewal of equipment within your company.

According to information published by the Universidad Panamericana, 4 out of 10 micro and small businesses use personal credit card of its owner or owner to finance its operations. In other words, we are confusing business finances with personal finance. This is a serious error since, in general, personal credit cards tend to charge higher interest rates.According to Victor Calderon, co-director of ArCcanto (firm specializing in investment banking services for SMEs), there are cases where employers have 15 or 20 credit cards, which together account for a debt of 3 or 4 million pesos. These entrepreneurs do not have a credit line for your business.

Banks have launched a series of loan products designed to meet the short-term needs of small businesses. So there are already adequate credit lines for SMEs, available through credit card

This new product offering is divided into two categories: credit cards aimed at micro businesses, with loans ranging between 20,000 and 180,000 pesos, and those directed to small and medium-sized enterprises with credit lines ranging from 180,000 pesos, 3.5 and 10 million pesos, the bank said.

These credits were designed to support working capital needs and purchase of fixed assets (furniture, transport equipment and machinery), improve the assortment and inventory, expand or renovate facilities and to cover payments to employees and suppliers. Read the rest of this entry »

All businesses need business credit accounts, but you have to know what you are getting into in order to do it right. If not, you will find your business in ruins, as well as your personal livelihood. It may even be impossible to get over it. No one is going to give credit to a business that isn’t prepared to pay them back and handle all the terms and factors that go along with these types of accounts.

But don’t despair, if you handle it all the right way, you will be offered the business credit you need and desire eventually. However, don’t think these accounts are a means to endless streams of cash. That’s not going to be the case for any company, especially if you are a new business just getting started. Lenders realize that most new businesses fail in a short period of time, and they don’t want to take a chance on them. Instead, expect to be approved for a business credit card and line of credit with reasonable spending limits.

Once the lenders have figured out you know what you are doing and are going to pay your bills, they may give you larger spending limits. But don’t just rush out and spend and spend all this possible cash flow. It’s more sensible to take it slow and only take the loans if you really need it. Don’t use business credit as a crutch. That will be dangerous and can backfire on you if you can’t pay it all back. Consider other options.

Otherwise you will fall into an all too common trap of overspending your accounts. Then, you will have so many installments to pay, that you won’t know how to handle it all. All your profits will go to pay the loans, and your business will go downhill. Too many people make the mistake Instead, take it easy and let your business have a chance to grow and don’t take out any more loans unless you have money to handle the debt.

Everyone likes going out and buying the latest and greatest gadgets, but it isn’t always practical or necessary to follow suit. You need to let a new business operate for awhile and grow to a point where it is steady and profitable. You don’t need new things just because they exist. Set some goals to meet, and as they come true, you can consider buying some of those new things on your want list if you have the cash to cover the purchase.

Above all, don’t take the bait of accepting every offer of credit that comes your way. Even if you need it badly, you have to watch out for things like fake lenders who just have a snazzy website, but aren’t for real. They know there are desperate companies out there who won’t take the time to do some research and find out which places are the legitimate lenders. Be careful. If you don’t, you will be losing a lot of time, money and credibility. It’s easy to just ask questions like, how long as the lender been in business, where are they, what do they offer, etc. Knowing these things puts you in the driver seat, not the lender.

So, you got your loan. Feeling good? Well, you aren’t done in the least. Now you have to pay it off in a timely fashion so you can build up the trust and good reputation your company needs to be able to have a good credit history so it can succeed and be able to apply for future credit when needed.