Managing Small Business Capital: Rate Surfer Can Help!
According to a National Small Business Association survey, the percentage of small businesses using credit cards to finance their companies has leaped from 16% in 1993 to 44% today. In addition, the number of bank loans to small business has dropped from 45% to 28%.
The shift of small businesses using credit cards to finance their companies' rather than bank loans has become more prominent due to a few factors. One major reason is the fact that it is difficult to qualify for a bank loan without possessing capital equipment. This has the greatest impact on service or informational companies who generally do not have large capital equipment investments. Another factor triggering this switch is the high interest rates on bank loans. An average fixed interest rate on a small business loan can be extremely high compared to a business card interest rate. Also, by using a credit card, daily or weekly access to cash may not be as stringent.
There are some drawbacks to this switch from loans to credit cards however. Unlike loan contracts, credit card issuers reserve the right to change the terms of repayment of the debt. In many cases, a credit card initially has a low interest rate, but that can change unexpectedly due to late payments or other factors. Additionally, the promotional period on credit cards are traditionally shorter than a fixed time loan and once the promotional time period expires, interest rates can increase dramatically.
The U.S. Small Business Administration states that one of the most frequent reported reasons why businesses fail is due poor management and closely behind that, is ill-timed or inadequate financing. Whether a business is starting or expanding, having sufficient capital is crucial, but is simply not enough. Managing finances properly and timely is necessary. Planning and being aware of the businesses' finances can prevent common and costly mistakes or cash shortfalls.
Rate Surfer offers several features that can help small businesses manage their credit cards insuring the best interest rate on borrowed money while continuously searching for ways to save the user more money. Rate Surfer can perform semi-automatic balance transfers to maintain low interest rates, as well as find new card deals that could be potential money saving opportunities. Rate Surfer also sends notifications and warnings when promotional interest rates expire or when payments are due, minimizing late fees and damage to the users credit score. Future features of Rate Surfer will include, online disputing of charges, online bill payment and comprehensive management of credit card statements. Rate Surfer is an efficient, productive and interactive tool that helps small business owners manage their cost of borrowing and provides a graphical understanding of where money is being spent. Time is money, let Rate Surfer help you save both!
- Credit Tips