At their Stanford campus in the late 1990s, Larry Page and Sergey Brin were working a fledgling search engine. They were getting so much usage that they needed to buy a terabyte of storage space. With no funding yet, they maxed out their credit cards and set up a data centre in a dorm room. Good bet. Their company, Google, today boasts 74,000 employees and a market cap of about US$730-billion.
It's safe to say the founders have long since paid off their initial investment. But even if your business isn't a tech behemoth in the making, strategically using a business credit card can still help you come out ahead.
There are different financial considerations at every stage of a business, explains Dan Kelly, president of the Canadian Federation of Independent Business (CFIB).
A 2016 CFIB survey found that 30 per cent of Canadian business owners used credit cards as a method of financing. That access to capital can enable a business to get off the ground, and can later help it to quickly pursue opportunities to expand.
"In the beginning you're trying to grow and convince investors that your business has some merit," says Mr. Kelly. "When you're an established business you're trying to take it to the next level. All of those things are not cheap."
Small businesses make up 98 per cent of Canada's commercial landscape. Some 150,000 are created each year, but only 51 per cent survive five years according to Industry Canada.
Even with an amazing idea or product, success is never guaranteed. For businesses, the availability of capital in the form of that plastic in their wallet could help determine if they're among the half that prospers or fails.
Anything can happen in business, from clients who don't pay on time to a piece of vital equipment breaking down. A business credit card can help companies stay nimble, says Adrian Lang of BMO.
"Having the right card, with a good credit limit, means peace of mind that it's there when they need it," says Lang, Head of Governance and Small Business Solutions, North American Retail Payments, Canadian Personal and Business Banking.
Business credit cards come with a host of features to accommodate the needs of any business at any point in their lifespan, says Ms. Lang, pointing to BMO's new product suite of business cards, which are tailored for the needs of small businesses.
She advises entrepreneurs to think carefully about their requirements at different stages. That can include:
- the safety of a low interest rate, in the event they have to carry a balance;
- accelerated earn rates; or
- the availability of multiple employee cards, with the ability to easily track their expenses in a consolidated statement and take advantage of fraud protections for employee spending.
For many companies, a business credit card can also be a part of an emergency fund, says Mr. Kelly. He says that's something every business should have, no matter how long they've been around, but often overlook.
"There's often a shaking out of the business community in those kinds of situations, like a downturn in the economy or a natural disaster, when only the strong survive. You want to make sure that short-term events don't end up taking you out, that your company is one of those survivors," explains Mr. Kelly.
To find out more about the suite of BMO's new small business credit cards, and other products and services for small business, visit bmo.com/business.
This content was produced by The Globe and Mail's Globe Content Studio, in consultation with an advertiser. The Globe's editorial department was not involved in its creation.