If you're recovering from the wake of the dumpster fire that was 2020, you might need additional capital. It takes money to reopen, rehire, and remarket your business to customers. However, many businesses are struggling to qualify for traditional loans due to their recent credit history. That's where a new business credit card can come in handy. Business credit cards can be an excellent tool to finance your small business. You can use a business credit card on just about any expense, making it a flexible way to fund everything from your payroll to your day-to-day costs. But should you open a new business credit card in 2021? Is now the right time? Would it be better to wait or look for other forms of financing? You have questions, and we have answers. This article will dive into the pros and cons that you should consider before opening a new business credit card this year. How You Can Use a Business Credit Card You can use a business credit card to finance just about any business-related expense. For example, you could use your card to: \tPurchase inventory \tFinance equipment \tCover payroll \tInvest in marketing \tTake clients out to lunch This flexible piece of plastic makes it quick and easy to complete business payments. Why Get a Business Credit Card Instead of a Loan? A small business loan isn't always your best option—there are a few scenarios where a credit card will be the better choice. If you need revolving cash to finance minor day-to-day expenses and boost your working capital, a business credit card will get the job done. Once you get approved for your credit limit, you don't need to reapply every time you need cash. Instead, you just pay off what you've borrowed, and boom—you get access to the total credit amount again. A new business credit card is going to expand your credit limit and improve your cash flow. In this situation, 2 is better than 1. Plus, qualifying for another credit card is relatively easy. If your credit score is damaged after last year, then a business credit card for bad credit might be your only financing option—and that's OK. Use your cards responsibly, and you'll rebuild your credit to qualify for bigger, better loans down the road. Lenders typically look at your personal credit score when offering you a business credit card. However, you'll still need to prove you can pay off your card each month. “While it may be easier to get a business credit card than a business loan, you still must demonstrate the ability to pay off your balance,” says business expert Kaylee Kolditz. "If business credit history isn’t established or isn’t good, you may need to make a personal guarantee that if your business can’t pay the bill, you’ll use personal funds to cover it." When You Shouldn't Get a New Business Credit Card Sometimes, another business credit card isn't the right answer. For example, you don't want to secure a credit card to pay off another credit card—that's a recipe for disaster. Only apply for another business credit card if you'll have the means to pay it off every month. Extra working capital is excellent for your business, but it can cause a major catastrophe if you begin piling on the credit card interest. If you need funds for a big one-time investment, it's better to use other financing options like a term loan, a line of credit, or equipment financing. Your credit score will be negatively impacted if you continue to use the majority of your credit limit, demonstrating to lenders that you're operating at the extent of your means. Remember, credit cards are typically a short-term fix—not a one-size-fits-all problem-solver. Credit cards are great for taking care of small, ongoing expenses, but you should consider other options for long-term financing plans. Apply for the Right Business Credit Card Need help choosing the right business credit card? Different cards have varying annual fees, interest rates, credit limits, and eligibility requirements—it's best to do your homework before choosing one. Here are a few important elements to consider when evaluating your options: \tBonuses and Rewards: Many of the best credit cards offer introductory interest-free periods and ongoing rewards. You can earn everything from cash back to free flyer miles. Choose a card with easy-to-use rewards—if you're not planning on doing any travel soon, don't choose airline or hotel reward credit cards. \tAnnual Percentage Rate (APR): The card's APR shows how much you'll owe if you carry a balance past the payment period. Ideally, you'll pay off your card before the end of the payment period—but that's not always the case. \tMinimum Payment: If you can't pay off your card's balance each month, you'll need to make at least the minimum payment. This minimum could be a fixed amount or a percentage of the remaining balance. \tForeign Transaction Fee: If you're using your card abroad, you'll have to pay foreign transaction fees. These are usually around 2–3%, but some credit card issuers will sneak in higher rates—so do your research if you plan to travel. So should you open a new business credit card in 2021? It depends. If you need additional working capital and can pay off your cards each month responsibly, then by all means—go right ahead. However, if you're looking for another business credit card to help with your current debt issues, it's best to look for a fix elsewhere. If you choose to open a new business card, let us help. Fill out our 15-minute application to access card offers from 75+ lenders. You'll get to see which cards you qualify for before choosing the one you need—which cuts down on time sorting through cards you might not be eligible to receive. After choosing your card, you can get approved the same day—it’s as easy as that. Get started now.