Credit cards small businesses
Getting a credit card as an individual is rarely a problem, but for businesses it can be more of a hassle. Unfortunately.
Credit card is a credit
The reason it is so difficult for businesses to get a credit card is that banks will not give credit to small businesses. And a credit card is the same as credit. It's that simple, unfortunately.
The bank wants to be sure they are making money on charges and not running a risk. Unfortunately, the risk is greatest when the company is small or a start-up.
How a credit card works
A credit card can be compared to an operating or overdraft facility. When the company uses the credit card, the costs are not paid directly, but collected on an invoice, which is usually due every month. In this way, the company has 45 days free credit for all purchases.
How does the bank make money from a credit card?
Merchants who accept payment pay a fee to the card issuer for each purchase. Often the fee can be as high as 2-3 percent of the amount transacted, and occasionally the fee can be as high as 5 percent - this is the case for American Express, for example. So accepting credit card payments is a big cost for sellers. Moreover, there is a greater risk of the card being stolen, and it is the seller's responsibility to cover that cost.
In addition, you often pay a card fee to the bank, plus they make a lot of money if your business doesn't pay on time.
What is the interest rate on credit cards for businesses?
If your company pays the bill on time, there is usually no interest. But if you can't pay on time, or choose to defer the bill, you can often risk paying interest of 10-25%.
What alternatives are there?
If you don't want a credit card with high fees and a personal guarantee, you can apply for a business loan. With us, your company can borrow up to DKK 250,000 and the money is paid out the same day.