Business credit cards are available from a wide variety of sources - and with a wide range of terms and conditions. Some are secured on assets of one kind or another and some are available on an unsecured basis. As with all forms of finance, you
need to know and understand the exact conditions under which the credit is being made available. One thing to look out for is early repayment penalties. Even if you do have the means to repay the credit early it could cost you extra in terms of a fee or penalty interest.
Most credits are covered by various consumer credit laws. They now give you "cooling off" periods and a lot of the somewhat dubious terms and conditions that were previously imposed have been made illegal. The majority of business credits is provided by banks and is usually subject to a minimum amount of $1000 and a maximum amount of $1m. Repayment terms are also flexible, depending upon the purpose of the credit and can range from a 12 month period up to 20 years.
In some circumstances it is possible to arrange a capital repayment holiday where only the interest needs to be repaid for the defined terms of the holiday. This can be advantageous for a new business in that it keeps expenditure down to a minimum whilst income is being built up from trade. This type of deferred repayment should be available regardless of whether you opt for a variable rate or a fixed rate credit. You need to consider the options of fixed rate or variable rate very carefully- you do not want to tie yourself to a high rate credit when interest rates are generally reducing. Variable rate credits are entirely flexible but you need to be aware that this can actually cause you problems if the base-lending rate increases.
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