Practice Financing With a Credit Card

November 4, 2017
American Veterinarian Editorial Staff

Many people immediately think about loans when they need to make large purchases. Here are a few reasons why a credit card might be the better financing tool for your business — and how to choose and use your new card.

You want to make a large purchase for your practice, say an ultrasound unit. If you don’t have the cash on hand, you will likely think about taking out a small business, personal or other type of loan. But what about using a credit card instead?

Every time someone uses a credit card, that person is essentially taking out a small loan. While credit cards are most often used for small, daily expenses, financing larger business purchases on credit cards does have some noticeable benefits.

Why Use a Credit Card?

No Wait Time

Using a credit card to finance your purchase means you won’t have to wait weeks — or longer — to get approved for and receive a loan. If you need flexibility or are crunched for time, you could secure enough money more quickly and easily by working with your credit card company.

Competitive Rates

If your credit is good, you might qualify for a zero percent introductory interest rate with a credit card, which means you’d have several months to pay for your purchase without being charged any interest at all. Be sure to read the fine print, though, and check to see what rate you qualify for.

Lower Annual Percentage Rates (APRs)

The finances and age of your veterinary practice plus your own personal credit score may qualify you for a better APR — the cost of the money you’re borrowing — with a credit card than with a business loan. Look into what you qualify for as a new business owner and make sure to check all your options. It’s possible that a credit card could save you more money in the long run.

Selecting and Using the Card

As a business, it’s probably best to get a business credit card rather than a personal card. Business cards usually offer higher spending limits and special bonus programs, and they allow you to keep your personal and business purchases separate.

They also help you build your credit for your business — which comes in handy if you want to apply for a business loan in the future. Finally, interest, annual fees and late charges from your credit card can all be deducted from your business taxes, as long as the purchases are related to your business.

When selecting a credit card, focus on the card’s APR and benefits rather than the annual fee or signup bonuses offered. In many cases, the rewards offered are greater than the annual costs you have to pay.

Finally, be sure to use the card on a regular basis — paying it off in full each month — to build your business credit and keep you out of financial trouble. If possible, don’t make purchases totaling more than 30 percent of your credit limit because that can have a detrimental effect on your credit score