Thursday, February 4, 2016

A Different Kind of Small Business Funding: Charge Cards

Co-authored by Fundera and American Express OPEN®

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Business owners shouldn’t have to go from lender to lender to compare funding options—they deserve a one-stop-shopping experience that lets them review different types of funding, so they can be prepared to act quickly when business opportunities present themselves.

To that end, today American Express® and Fundera are excited to announce that we recently expanded the Fundera small business funding marketplace to include American Express OPEN® Charge Cards.

For the first time, Fundera customers will be able to compare Charge Cards alongside traditional financing products to help them find the product, or suite of products, that best meets their funding needs.

This Business Tripled Production… And American Express OPEN Was There To Help

In 2013, New York City-based small business Hella Bitters had a series of fortunate events.

A large home goods retailer was so impressed with the performance of Hella Bitter’s product that they wanted to sell the brand nationwide. Not far behind came a major food show, leaving the entrepreneurial trio of Jomaree Pinkard, Tobin Ludwig, and Eddie Simeon scrambling to fill over 50,000 orders.

They needed to triple their production—fast. How were they going to pay for it?

The group turned to their American Express OPEN Card to help make it happen. And, as they were able use their Card to purchase ingredients they needed to help keep production moving, they were able to maintain their momentum from the food show. “Before that show changed everything, we were sold in 200 storefronts nationwide. After the show, it was about 1,500,” says Jomaree Pinkard, co-founder of Hella Bitters.

Have you ever seriously considered Charge Cards as a source of funding for a growing small business? Probably not. But Pinkard, Simeon, and Ludwig would agree with us: it’s about time you do.

Why Charge Cards Make Sense for Small Business Funding

By bringing American Express OPEN Charge Cards onto the Fundera platform, we’re hoping to help more business owners see Charge Cards as a source of funding. Here’s why:

1. For starters, there’s no pre-set spending limit.  This doesn’t mean unlimited spending, but unlike a Credit Card, the spending limit on Charge Cards can adjust with your use of the Card, your payment history, your credit record, and other factors that American Express takes into account. By contrast, Credit Cards have fixed spending limits that do not adjust frequently.  In addition, with a Charge Card you pay off your balance in full every month (or, in some select cases, every 60 days).

2. They help business owners take advantage of time-sensitive opportunities for growth.  Here’s a popular scenario seen on the Fundera marketplace: a small business owner is presented with a great opportunity to scale and grow their business, but they need access to funds quickly in order to pay for the inventory, materials, and so on to take advantage of it.

With a Charge Card in their wallet, a business owner could use the Card to pursue a new opportunity without having to wait for an approval of a loan application. With the Charge Card they will typically have 30 days to pay back the balance, without incurring interest. With the American Express OPEN Plum Card customers can even choose to defer their balance for up to 60 days without interest after paying a minimum balance due, or earn a 1.5% discount after paying their balance early. Of course, this only works if they have the cash flow to pay off their balance regularly, but those creditworthy borrowers often do have the cash flow that makes this scenario work.

Simply put? Charge Cards are a great option for creditworthy borrowers in need of funds fast.

3. They can be a complementary product to a traditional loanIn some cases, small business borrowers may not qualify for the full loan amounts they need: they’re typically capped at 8-12% of the business owner’s annual revenue. Many business owners can use Charge Cards to purchase core business expense items like equipment, inventory, raw materials, and bulk supplies. By using their Charge Card strategically, these business owners can maximize the benefits of their other funding sources.

A Charge Card can also be used for future funding needs. Sometimes a business owner takes out a loan for a large sum that they need time to pay back… But while they’re paying off that loan, smaller funding needs present themselves. Instead of going through a whole new loan application, the business owner can help cover those gaps with a Charge Card. Plus, it can be more difficult to get a loan when you have existing debt—another reason having a Charge Card on-hand can help.

Charge Cards can offer significant buying power within a 30-day window (60-days in the case of the Plum Card), and interest is not charged because you pay your balance in full. Charge cards are a powerful funding tool for business owners able to pay off balances within a short period of time. Business owners can now apply on Fundera for the following Charge Cards offered by American Express OPEN®:

  • The Business Gold Rewards Card
  • The Plum Card®
  • The Business Platinum Card®

For business owners who prefer to stick with a traditional Credit Card—which allows them more time to pay off their balance, with interest—Fundera will also be offering the following Credit Cards from American Express OPEN®:

  • SimplyCash® Business Card
  • The Blue for Business® Credit Card

Business owners should also note that all OPEN cards come with unique financial management products not often found with other financing and credit products. For example:

  • ReceiptMatch allows business owners to easily add receipts to their transactions, along with other tags and notes. This keeps expense management simple and streamlined.
  • The Account Management tool allows business owners to invite their business partner, assistant, or someone else to help manage their account. Take paying your bills, disputing charges, and more off your plate.
  • Employee cards help you stay on top of expenses. You can control employee’s spending limits, keep an eye on where they’re spending money, and earn rewards on their purchases.

Apply for an American Express® OPEN Card and other small business products with Fundera today.

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