Leveraging credit cards for your business, especially for small businesses, can improve performance and seize more opportunities. However, please don’t take the wrong step when you implement it. This article will give you step-by-step how you can use your credit card to finance your business wisely.

STEP 1: Understand the Benefits of Credit Card Financing

Before applying for one, make sure you understand WHY a credit card can help. There are two significant advantages.

The first is convenient access to revolving credit. With a credit card in your wallet, you can easily cover cash flow gaps and pay off short-term business expenses, all without applying for a loan. This flexibility can be an incredibly massive plus for businesses with more sporadic revenue.

The second is the opportunity to build up your business credit, which lenders use to evaluate whether your business is eligible for a loan down the line. By separating your personal and business finances, you make sure your personal credit won’t affect your business’s score or vice versa.

STEP 2: Appreciate the Risks, too

Being said, using a credit card to finance your business also comes with some potential dangers.

While the additional flexible cash flow can go a long way towards growing your business’s early days, misusing a credit card can lead to a damaged personal credit score and, if the situation is bad enough, a failed business.

STEP 3: Pick the Right Card

First things first—you’ll most likely want a business credit card, so you can start building up your business credit and dividing up your business and personal financials. Plus, business credit cards typically come with higher spending limits and special business-oriented bonus programs, like discounts on office supplies and travel.

While it’s essential to consider a credit card’s annual fee or starting bonus, you should focus on its interest rate and benefits. Sometimes their rewards programs can dramatically outweigh any yearly costs, depending on how you use your card.

Take your time, do your research, and find the cards that match up best with your needs.

STEP 4: Get Everyone On the Same Page

This might seem obvious, but make sure everyone involved in your business understands who gets to use the company credit card, for what, and when. There are a few reasons for this.

For one, you want to maintain tight control over your business’s credit card debt. It’s important to spend within your means and to make payments on time—and to do that; you’ll have to keep track of your expenses.

And for another, many business owners are personally liable for their business credit cards. Although big companies often get a “commercial liability,” small business owners usually need to sign a personal guarantee. Identify which business owner is backing the credit card and set up a strategy to stay within their spending means.

STEP 5: Take Advantage of Introductory Rates

Plenty of credit cards come with 0% APR for 9 or 12 months—so don’t waste your opportunity. You can take advantage of these no-interest loans by making a large purchase early on and paying it off month-by-month since the balance won’t be charged any interest.

Don’t go over too much, though: you wouldn’t want to be stuck in a situation where you can’t pay off that debt by the end of the introductory rate period.

STEP 6: Use It Regularly

While you don’t need to use a credit card to finance every business expense, you should make regular use of your available capital. Otherwise, you risk getting the card account shut down due to inactivity, which can lower your credit score.

Keep your spending within 30% or less of your credit limit, however. Credit utilization (or how much of your available credit you use) is an essential factor in your credit score, and utilization rates over 30% can hurt you.

STEP 7: Never Make Late Payments

The number one rule of business financing: pay your debts back in full, on time, or your credit score will take a big hit. Using a credit card lets you grow your business by spending beyond your means, but don’t lose sight of the fact that you’ll still need to pay those expenses.

STEP 8: Deduct Interest from Your Taxes

Finally, don’t forget to deduct any credit card interest from your business’s taxes. As long as the purchases were business-related and you’re removing the interest during the same year, you’re good to go. (Plus, you can also deduct any annual fees and late charges associated with your credit card.)

There’s nothing to be afraid of when it comes to financing your business with a credit card. Just make sure to follow these steps and be thoughtful of your spending habits, and you’ll qualify for more extensive financing before you know it.