businessman-typingDon’t be afraid of credit cards. Smart debt can be a cash-flow safety net for your small business and help build your credit score.  There are a number of reasons small business owners may avoid credit cards: They are afraid of running up debt, worried about how credit cards may affect their credit scores, or they are just too busy to get around to searching and applying for one.  Those are legitimate concerns. But for every reason to avoid credit cards, there are more reasons to use them in your small business.

Here are four reasons small businesses should use business credit cards:

1. Build Business Credit
According to a Manta survey, 72% of small business owners don’t know their business credit scores. Chances are those business owners don’t know how to build strong business credit either. Fortunately, there’s a simple way to get started: Use a business credit card. Major credit card issuers report business credit card activity to commercial credit reporting agencies, which in turn can help build credit.

To develop strong business credit scores, you’ll want to make sure you make payments on time and keep your debt usage low.

Keep in mind that most (though not all) business credit card issuers report activity to business credit bureaus and not to the owner’s personal credit reports unless they default. You’ll find a list of how business credit cards report to personal here.

Business owners can access their personal and business credit scores for free at

2. Rack Up Rewards
You work hard, and may not see the fruits of your labor for a while. You may forgo a regular paycheck so your employees or suppliers can get paid, or you may find yourself putting in long days (and nights) as you take your business to the next level.

At some point you need a break, and the rewards from your business credit card may be just what allows you to get one. Many entrepreneurs find the rewards from their business credit cards extremely lucrative. Rewards may allow them to pay for a much-needed vacation, holiday gifts for their family, or even allow them to do something nice for employees who are working extra hard to make the business grow.

Whether it’s frequent flier miles, free checked luggage and upgrades when you fly, or just cash back—everyone can use more cash—the rewards offered on business credit cards are often superior to what can be earned as a consumer. Credit card companies want small business owners as cardholders, and the reward programs they offer reflect that.

3. Fast Cash
An unexpected cost in materials needed to complete a job, or a potentially lucrative opportunity with an unexpected upfront cost—whatever the reason, there may be times where you find yourself short of the funds on hand you need to get a job done. If you don’t already have access to a line of credit, you may find yourself turning to expensive options such as merchant cash advances or cash flow financing at a cost of 30% to 50% APR or more.

Your business credit card, by contrast, probably carries an interest rate of less than 20%, and can be tapped immediately without having to fill out an application for credit. You’ll have flexible repayment terms as well; you can make minimum payments while you get the job done, and then when the funds are available, repay the balance with no prepayment penalty.

Of course you want to be strategic and careful about taking on debt. Ideally it should be used to help your business grow and produce returns greater than the cost. But when a situation comes along where you need access to capital quickly, a credit card can be an ideal source for fast funding.

4. Safety
Credit cards are the safest way to pay for purchases in your business. If your business or personal credit or charge card is fraudulently used, you are protected against unauthorized purchases. In addition, if there is a billing error or if merchandise you purchased with a credit card is not delivered as agreed you can file a dispute with your card issuer. By contrast, no federal law offers protection for fraudulent business debit card use, and there are no chargeback rights with business debit cards either.

All in all, a business credit card can be a valuable tool for your small business. Business credit cards are not to be overlooked—they are one of the safest and most flexible ways to pay for business purchases, often offering higher credit limits than personal cards and very lucrative rewards. Either way, you’ll want to keep tabs on your personal and business credit scores, to make sure they are as strong as possible–and stay that way.

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