A Secured Business Credit Card Can Provide Liquidity
Over six hundred thousand businesses are started in the United States every year, according to the Small Business Administration. Entrepreneurship is thriving in America, and this is a very salutary characteristic of the United States. That being said, fifty percent of all new businesses fail within five years. Of the six hundred thousand businesses started each year, only three hundred thousand will be left in five years, on average.
There are many reasons why this happens. Poor decision-making skills, the wrong chosen market, and poor marketing are often cited, but one of the biggest reasons is lack of cash flow. Without positive cash flow or liquidity, the business is dead in the water. No cash equals no capital investment equals no profits equals dead business. The key element is thus the proper amount of liquidity to finance business expenses.
How can businesses maintain an appropriate amount of liquidity or cash reserves to keep themselves afloat? A popular method is a secured business credit card. Since liquidity is often equal to credit these days, having good credit and the ability to access loans is great for the business. In order to achieve good credit, the business can apply for a secured business credit card.
This represents a risk-free deal for the lender because the credit limit of the card is equal to the amount of a cash deposit the business makes with the lender. This is so the lender can seize the cash as the collateralized asset if the business defaults on their debts. The good news is that the business has access to liquidity and the ability to enjoy some privileges, such as extended equipment warranties and overdraft protection.
The bad news is that interest rates are often higher. Depending on the industry of the business, such as real estate investing using investment property mortgages, this should not be problematic.
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- Methods On How To Get Credit Card Interest Rate Lowered
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