Over the past couple of years, the credit card industry seems bent on shaking up the credit markets so that it comes out in their favor. For small business owners with business credit cards, there has been virtual tidal wave of often unexpected changes- from cut credit lines to closed accounts- that seems to blindly strike irregardless of credit score and payment history.
If you use a business credit card extensively for short-term financing in your small business, then take heed to the following tips:
1. Expect the unexpected. These days, even if you have sterling credit and you’ve been using the same credit card for several years, you shouldn’t take your credit limit for granted. There are countless stories of business owners who watched their credit line virtually disappear without warning or provocation. Thus, pay attention to your account.
2. Be aware of what can trigger a change. There are several common factors that can result in a reduction of available credit: a sudden, significant change to your credit score, a large unusual purchase, “too much” activity (i.e. you keep using the card so you end up staying close to your current credit limit), and “too little” activity (i.e. you don’t use the account so often).
3. Have a backup plan. If you are using your business credit card heavily and/or are dangerously close to your available credit limit, then consider using either a backup credit card (just make sure to make a few charges with it so it shows recent activity) or secure another means of quick, short-term financing, such as business cash advances and accounts receivables financing.
In short, with a little effort and due diligence you can stay one step ahead of any unexpected curve balls your credit card company may throw you.