New Business Credit Cards

Business credit cards are available from a wide variety of sources - and with a wide range of terms and conditions. Some are secured on assets of one kind or another and some are available on an unsecured basis. As with all forms of finance, you need to know and understand the exact conditions under which the credit is being made available. One thing to look out for is early repayment penalties. Even if you do have the means to repay the credit early it could cost you extra in terms of a fee or penalty interest.

Most credits are covered by various consumer credit laws. They now give you "cooling off" periods and a lot of the somewhat dubious terms and conditions that were previously imposed have been made illegal. The majority of business credits is provided by banks and is usually subject to a minimum amount of $1000 and a maximum amount of $1m. Repayment terms are also flexible, depending upon the purpose of the credit and can range from a 12 month period up to 20 years.
Tip! Cut up all credit cards but one. If you can't use it, you can't run up more debt.

In some circumstances it is possible to arrange a capital repayment holiday where only the interest needs to be repaid for the defined terms of the holiday. This can be advantageous for a new business in that it keeps expenditure down to a minimum whilst income is being built up from trade. This type of deferred repayment should be available regardless of whether you opt for a variable rate or a fixed rate credit. You need to consider the options of fixed rate or variable rate very carefully- you do not want to tie yourself to a high rate credit when interest rates are generally reducing. Variable rate credits are entirely flexible but you need to be aware that this can actually cause you problems if the base-lending rate increases.
Tip! Bank Sponsored Vs. Airline Sponsored Credit Cards.

Business Credit Cards provides detailed information on Business Credit Cards, New Business Credit Cards, Secured Business Credit Cards, Bad Credit Business Credit Cards and more. Business Credit Cards is affiliated with Small Business Credit Cards.

Increase Your Sales - Accept Credit Cards

Many people today simply prefer the convenience of paying by credit card. If you want their business, you must be able to accept their credit-card payments.

In part one of this series we will discuss why you should accept credit cards, and the basics of getting merchant status. Part two will deal with objections you might get, which credit cards to accept, and the check paying option.

Obtaining merchant status, which allows you to accept credit-card payments, might seem like an unnecessary hassle, especially for those in business where the majority of their customers pay by cash or check. But by not accepting credit-card payments, you lose sales. This is especially true if yours is a mail order business, or consulting business. Just look at the majority of business today, all of them accept credit cards, and becoming more and more popular all the time are debit cards.

As many businesses have found, up to 70 percent of people never mail the check, so accepting credit cards is crucial. When the customer places an order, he's excited and eager to buy. Faced with the prospect of sending a check, waiting for it to clear and then awaiting shipment, his interest is likely to wane. In the meantime, you lose sales.

The Basics of Merchant Status

In order to accept credit cards, you need to work with a bank that will transfer the money into your account within a day or two of the sale, and then collect the money from the customer. In return, you pay the bank a commission of 1.5 percent to 5 percent for each credit-card transaction; a set, per-transaction fee; and a setup fee. You will also have to pay monthly support or equipment-rental fees for a point-of-sale terminal—the machine used to swipe the card—depending on the contract.
Tip! Know the Annual Membership Fee. Airline credit cards are different than most credit cards as they carry an annual fee.

The fee is based on two things, the average amount per transaction and the total volume for the year.

When you apply for merchant status, the banks evaluate your business based on its sales track record, the type of business it is, your credit record, the business's credit record and your overall financial picture.

Apply for merchant status when you get your start-up financing. This accomplishes several things. First, it shows that you've thought ahead. And you will probably have customers that you wouldn't have otherwise. In fact, some people don't pay with anything but credit cards.

Second, you show you're taking steps to minimize the time and expense involved in recovering bad debts. If someone writes a bad check, for instance, it will cost you time and money to recover the loss. If you swipe a customer's credit card through a point-of-sale terminal, you can be sure you'll get paid. The machine contacts the issuing bank to authorize the transaction and runs the account numbers through a variety of fraud-protection procedures.

In part two of this series we will deal with objections you might get, which credit cards to accept, and the check paying option.
Tip! Insurance: All credit cards should come with insurance, which covers you for fraud or theft that results in your card being used before you can cancel it. With the rise in the number of people buying on the Internet nowadays this is a vital requirement.

Copyright 2004 DeFiore Enterprises

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