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4 Advantages of Using Business Credit For Your Ecommerce Business

August 5, 2021

When you start or scale your eCommerce company, a business credit card will become essential for funding business expenses.   

Not everyone will have investors, start-up capital, or want to take out loans that will ask for a high percentage back in interest.  

Here are four advantages of using business credit cards for your eCommerce businesses expenses:

1. Higher Credit Score  

There are many benefits of using business credit as a means of financial capital for your eCommerce business. Whether you are a single brand retailer, wholesaling, or a marketplace platform, using business credit comes with the perk of better terms when you divide your expenses from your business expenses.    

Here’s how: Your credit score may have dropped due to carrying too much debt on your credit card. It raised the debt to credit ratio and impacted your credit utilization rate. Therefore, your credit score may be lower than you wish because you used your personal credit card to hold business charges.   

Most businesses that are beginning lean on personal credit to foot the bill for business expenses. What you will find, when you switch over to business credit is that your inventor expenses or application charges no longer impact your personal credit score due to the use of your business credit cards.   

Your credit score will no longer be lower and it will bounce back from charging business expenses on a personal card.

2. Better Purchasing Freedom than Traditional Loans

When using business credit for eCommerce needs, it has much more accessibility and flexibility in comparison to traditional loans.    

For example, an SBA microloan (a loan under $50,000) will not allow you to diversify your use of funding to purchase real estate.   

Business credit cards have no such stipulations when it comes to using your funds to purchase real estate for business purposes. (In fact, a large percentage of Fund&Grow clients who seek business credit are real estate investors.) When you acquire business credit, you can make any purchases related to your business needs.   

Additionally, when working with loans you may tie up your cash flow that can be used for other aspects of your business.   

When using business credit, you can control your overall debt level in comparison to your cash flow and balance your expenses that way your business expenses are not completely tied to debt.   

Finally, if you miss a payment for a business loan, it will negatively impact your business credit score, especially if it defaults into collections.   

If you are falling behind with aggressive payments for business credit debt- you can pay the minimum balance until your finances catch up without hurting your business score. (Something that you cannot do with personal debt without damaging your score.)

3. Spending Control  

As your eCommerce business expands it may be necessary to hire employees for the day-to-day operations of your business. When your company issues its employees a company credit card, there should be rules that govern how to use them.   

Your business credit card can track employee spending and may even be able to create customized limits for each card user.   

This is extremely helpful when it comes to employee accountability for company spending.   

Many business credit cards will allow cardholders to see individual spending reports based on the card issued, instead of having each employee manually document expenditure receipts on a month basis.  

This way business credit card spending is accounted for while having automated spending control for each employee.

4. Reward Points  

Let's say you have a subscription eCommerce business and find yourself with a reoccurring expense for popular inventory items.  

This expense will be ideal for your business credit card. If you have cyclical expenses, whether it involves taxes, insurance premiums, or domain names, a credit card is a good choice for covering them.  

When you have annual expenses as a business owner, you will quickly rack up plenty of points for business rewards.   

Before choosing which business credit card you are interested in, consider reviewing the reward systems. Do you travel frequently? Or are you interested in cashback?   

Business credit rewards are an amazing way for small business owners to earn points, flier miles, or cashback on every purchase. This is ideal to reinvest back into your business such as paying for employee flights, and hotel expenses when traveling.   

Bottom Line  

Business credit cards are the ideal way to approach your eCommerce company where you are just starting or getting ready to expand. Business credit will raise your personal credit score, allow for better purchasing freedom than traditional loans, spending limits, and reward points.   

Your eCommerce company can reap all of the rewards of business credit cards if you use your card often, make timely payments, and budget your expenses.  

Do you have an eCommerce business but have not accessed business credit yet?  

No problem, we can help! At Fund&Grow we help clients with good credit obtain as much as $250,000 of unsecured credit at 0% interest. This amount is available for a period of 6, 12 or 18 months, and can be used for any business-related expenses from financing a small business to providing a down payment on a property. 

Have business credit but need better access to higher limits? We can help. Call us at 800-996-0270 and we will help you out immediately! 

Want to read our featured articles about business strategies? 

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