Small businesses are increasingly becoming reliant on credit cards as an additional source of funding. However it is a common dilemma that it is almost impossible to qualify for a business credit card with less than perfect credit. Small business owners are often forced to use personal credit cards for business usage, rather than securing a card intended solely for business use to thus separate business and personal expenditure.
The Applied Bank has introduced the small business micro loan Visa card that is available to both public and private companies, including sole proprietors. It is intended solely for business purchases or expenses, and is embossed with the name of the business. It is available no matter how small the business and is aimed at those with a poor credit history, or those who need to establish a credit history. It is even available for start ups that often find it incredibly difficult to obtain credit without a proven track record. The maximum credit limit allowed on the card is $750.
The micro loan Visa comes at a price. There is an initial account origination fee of $125, deducted from the available credit limit, thus automatically decreasing available credit to $625. Additionally there is a monthly management fee of $9.95, with the first month’s fee also being deducted from available credit.
The APR is 23.99 percent and applicants should be aware that there is no grace period at all, meaning interest is charged on all purchases immediately. The penalty APR is 29.99 percent and will be applied from the first day of the next billing cycle after any payment has been made late. Applicants should note that late payment of interest, charges or fees will also result in the penalty APR being applied.
Other fees levied on the Applied Bank small business Visa include a foreign currency fee of 3 percent, an additional card holder fee of $30, and a cash advance fee of $5 or 5 percent, whichever is greater.
Used responsibly the card can help to establish or improve credit, but the fees and lack of grace period make it an expensive choice. The risk of incurring the penalty APR of 29.99 percent applied with no grace period is high if a business is experiencing cash flow problems. There is the additional risk of damaging business credit which in turn would make it more difficult to transition to a business card with lower interest rates and higher credit limits.
The Applied Bank small business micro loan Visa card is however the only business card specifically geared to poor credit in the current market. Applicants should give careful consideration to the terms and conditions before opting for the card.