Can a business credit card boost your side business?

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Side hustles grow organically, from very small beginnings. The nature of a secondary hustle may not be a big deal, but even so, there may be essential start-up costs or ongoing expenses. Applying for a business credit card is one way to get financing and grow your side business into something more profitable.

Is a business credit card the right choice for a side hustle?

First of all, it is essential that you earn enough money to meet repayments. Starting a full-time small business involves developing a business plan, but side hustle is different. The ideal side hustle is flexible rather than a full-time commitment. It is important to think carefully before borrowing.

Many people start a side hustle without having a clear idea of ​​their success. It’s fine if the only expense is time. To get a business credit card, you need proof of sufficient business income. Alternatively, you need to be able to convincingly predict how much money you are going to make. It’s not a good idea to borrow money without a reasonable commitment to maintain your side business. Borrowing can be a positive move if your intention is to grow.

For those ready to make their work more central, a business credit card could help cover the costs of this transition.

When to apply?

For a new business, it’s best to wait to apply for a business credit card if you don’t have essential fees at the start. Once the profits start rolling in, you could benefit from a flexible way to borrow money to build your side business.

Plus, you may be able to get 56-day interest-free credit. When you need help with your cash flow, now might be a good time to apply.

How easy is it to get a business credit card?

Independent contractors, freelancers and sole traders can apply in their own name, provided they are registered as self-employed. In practice, it is not so simple to be credited with a secondary stampede.

Each supplier will have requirements which might include minimum turnover, business bank account or other stipulations which might be difficult for a secondary hustle to meet. For example, the Barclaycard Select Cashback Business credit card is only available to those with a turnover of £10,000 or more. Others, like the Capital On Tap Business Rewards credit card, are exclusively for LLCs.

One way to get a business credit card is through the bank where you already have an account. For example, you can get a business credit card if you have an account with Santander.

There are benefits to persevering in finding and applying for a suitable business credit card:

  • Some rewards and incentives can be very tempting.
  • It’s easier to keep your business and personal expenses separate and better organized.
  • You can start building a positive credit rating for your business.

You might want to think twice about an extra credit card if you tend to overspend.

Is a personal credit card a good choice to fund a side business?

As an individual entrepreneur, you are personally liable for business debts. Paying off business credit cards in addition to personal loans can seem risky. This is especially true if one of the reasons you started a side hustle was to pay off debts. Your personal credit score will also be taken into account.

It’s still possible to have a separate card for your side business, even if it doesn’t have the word “Business” printed on the front. An existing credit card, or a new credit card with 0% on purchases, can still offer rewards and should be just enough to pay for start-up costs, such as tools, equipment, and materials.

Any credit card can help separate out-of-pocket expenses from personal expenses. Then you can continue the habit when you become eligible for a business credit card or open a separate bank account.

You can’t use a business credit card for personal expenses, but there’s nothing stopping you from doing the reverse.

Is it better to avoid borrowing money for a side business?

It’s wise to try to save some money to fund your side hustle in the first place and as long as it’s still in the stage of a hobby that earns some money.

For very new and micro businesses, there may be more appropriate ways to pay for business fees and expenses, which should be minimal.

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