Small Business Credit Cards |

Business Credit Cards

Quick Overview

  • Credit balance is paid in regular monthly payments
  • Secured with good credit history
  • Interest rates vary from 10% to 24% APR
  • Available online and from banks or credit unions

By Bradley Harris | Last Updated: December 29, 2022

When business owners need cash, there are a host of options available to help them make purchases and cover costs. Business credit cards may seem like one of the most straightforward options – but there are plenty of important factors to know before you open or use one. Here’s what to look for in terms of rules, benefits, rates, eligibility, and more.

Why Have a Credit Card for Use in Your Business?

Unlike many financing options for business owners, business credit cards are often available to business owners at any stage. Because the cards may be based on personal credit, they are often easier to cover on your own than a traditional loan.

In addition, using a credit card for your business can be an important step toward establishing/improving your business credit.

Keep in mind: Many small business owners use their personal credit—including credit cards, cash advances, home equity, etc.—to start and build their businesses. The drawback to this is that if the business does not generate sufficient revenue to pay the bills, the owner’s personal credit can take a hit. Maintaining a separate business credit line can protect you from this situation.

Here are a few more reasons to maintain and use a credit card in your business activities:

  • Using a card can be fast and easy, simplifying payment processes as well as returns and exchanges, and providing fraud protection.
  • Many businesses won’t take checks, but will take credit cards.
  • Credit card statements provide automatic record-keeping. Your monthly card statement shows all of your purchases and payments—and you may also get an end-of-year summary, including a simple list of transactions that are sorted and subtotaled by category.
  • Most credit cards offer benefits including “reward/loyalty points” and cashback, discounts on certain stores and services, extended warranties, and other protections on purchases (trip cancellation insurance, auto rental collision damage waiver, road service, price protection, etc.).

When to Get a Business Credit Card?

If you already have a credit card for personal spending, you could also use it for business-related purchases. But it’s preferable to have a separate credit card(s) dedicated to business use, even if you’re a small business. If you’re incorporated and have employees, it’s a good idea to maintain a just-for-business card.

Note that a “credit card” means there is a credit line associated with the account, allowing you to either pay the bill in full, or overtime—including, of course, monthly interest, and, depending on the card’s rules, fees (typically for late payments). By contrast, a “charge card” was originally used to refer to “pay in full” accounts, but these days, “credit card” commonly refers to both pay-in-full and pay-over-time cards.

How a Business Credit Card May Help Build Business Credit?

It may sound counterintuitive that a small business credit card can help build business credit, and as a small business owner, you may have concerns about how using a credit card and the potential for accumulating debt might impact your credit. While it’s true that unpaid credit card balances can have a negative impact on your credit score and therefore the health of your business, if you use your small business credit card wisely, it can help you establish and build the credit for your business.

Some of the major issuers, or banks that issue small business credit cards, also report their financials to the major credit bureaus, including Equifax, Experian and Dun & Bradstreet. Using a business credit card issued by one of these entities means your financials get reported to the major credit bureaus and can help build your business credit up. If you make payments on time with a card from an issuer that reports to credit bureaus, you’ll be able to grow your business credit score, opening the door to approval for better financing opportunities in the future.

Qualifying for a Card

Like applying for a mortgage or other loan, you’ll have to provide information such as checking and savings account numbers, and have a good credit history.

Your personal and/or business credit history and rating may also determine how much—or how little—a spending line and credit limit you can get, and how much interest you will be charged on any pay-over-time balances.

Depending on where you apply (be it a bank, credit union, AmEx, etc.), you may be able to qualify for a business card as a Schedule C sole proprietor even if you don’t have a Federal Tax ID/Employee Identification Number—which is easy and free to get from the U.S. government.

Similarly, you may be able to qualify even if your business is so new that it has neither established credit history (as opposed to your own personal credit history), nor any established revenue.

Personal Credit Scores vs. Business Credit Profile

Keep in mind: If you don’t have a good personal credit rating, you may have trouble getting a credit card for your business.

If your personal credit makes you ineligible for a business credit card, consider a charge (pay in full each month) card, a low spending limit, or a prepaid card. Like with personal credit cards, establishing a good track record here can allow you to increase your spending limit over time.

And remember that, just as your personal credit rating will influence what kind of card you can get for your business, how responsibly you use your business card (e.g. whether you pay your bills on time) can influence your personal credit rating, which in turn can help when you are applying for a business loan or line of credit down the road.

How not to use a Business Credit Card?

A business credit card can be useful for many types of purchases, notably travel expenses. But the card, and its associated credit line, aren’t right for everything.

In particular, a business credit card should not be used for:

  • Payroll
  • Debt Consolidation

For some purchases, like financing new equipment, a bank may place a “purchase money lien,” requiring that money go directly to the vendor.

Business Credit Cards and Bookkeeping

A key reason to have a credit card for business use is to automatically keep personal purchases, and associated fees, separate from business expenses—just as you keep separate checking accounts for personal versus business activities.

Note: You’ll still want to match line items on your monthly card statement to your business ledger, but you won’t have to first identify which items on a monthly statement are business-related.

Remember that fees, interests, and other costs on the card used for business are legitimate business expenses. Also, your employees may need to make company-related purchases away from the office. With a card account just for your business, you can have cards issued for these employees, helping you track their expenditures.

Choosing a Card: What You Should Know?

A good starting point in selecting credit card(s) for your business is identifying which one(s) the companies you deal with taking. For example, a business that accepts MasterCard typically accepts Visa, and vice versa—but not all businesses accept American Express. (So you may want to get an American Express card and a MasterCard or Visa.)

Annual Fees: The annual fee for a card can be anywhere from free to several hundred dollars, with $30 to $100/year being typical. (The more expensive fees are usually for cards with air travel and “concierge” benefits.) In general, the first-year fee is $0.

Interest Rates: Interest rates (for credit—pay-over-time—accounts) vary depending on a variety of factors. Some cards start with 0% for the first six to twelve months—and can increase from there.

Changes in Rates: “Events” can also trigger changes in your interest rate. These include your payment history to the card—be late one too many times on a payment, and your interest rate can really go up. Depending on the card, even being late on a completely unrelated bill, like a utility bill, can trigger an interest rate jump. (Often, you can requalify for a return to a better rate after being compliant for six to twelve months. But don’t expect the bank to proactively make that change—call and request a rate reduction when you feel like you’ve waited long enough.)

A business credit card is not subject to the same protections that consumer cards are, like those provided by Congress’ 2009 Credit Card Accountability Responsibility and Disclosure Act, which limits late fees and rate increases.

It’s also important to read where card activity reports will go—will they be associated with your consumer records, or go only to business credit reporting agencies? Also, if you will be giving employees access to the card account, will you be personally responsible for payments?

Depending on the nature of your business and your business-related expenses, you may want to consider a “branded” credit card, e.g. from the airline or hotel, you patronize frequently, for benefits like better upgrades, membership points, free checked bags when flying, and the like. If you travel internationally for business, check prices on foreign-transaction fees.

How to Apply for a Small Business Credit Card?

Applying for a small business credit card is very similar to the process for applying for a personal credit card. There are opportunities to apply for a small business credit card online, often with an instant response on whether you have been approved.

You’ll have to provide documentation about your small business in order to apply for a small business credit card, including if you have an Employer Identification Number (EIN). Note that if there are any other partners who own more than 25% of your small business, you must disclose their information on your small business credit card application as well.

To Sum Up

There are clear reasons—and benefits—to having one or more business credit cards available for use. Like personal credit cards, you have to select and use them responsibly. If properly managed, they can help your cash flow and accounting, expedite aspects of doing business, and possibly save you money.

Mobile devices

Ready to get started?

View your options today

Answer some questions in less than 3 minutes, no impact to your credit score, multiple offers YOU are in the driver's seat!
get startedarrow