Startups are a little different from traditional small businesses. In general, the intention of these young companies is to make waves with a groundbreaking product or service. If you are one such entrepreneur, a credit card that can fulfill your company’s unique needs will be essential.
With a business credit card for your startup, you’ll have access to necessary capital, be able to take advantage of extra flexible financing terms and enjoy perks that will help you connect with clients around the globe.
Best business credit cards for startups
Startup business credit cards are most appropriate for the requirements of a company that’s preparing to disrupt the marketplace. The best credit card for small business startups depends on what you most want from the account.
Ink Business Preferred Credit Card: Best for sign-up bonus
- Rewards: 3X points on the first $150,000 you spend on travel and select business categories each account anniversary year, then 1X points. 1X points on all other purchases
- Annual fee: $95
- Regular APR: 15.99 percent to 20.99 percent variable
If you could use every dollar you can get, a credit card that gives you a big welcome bonus will be helpful. With the Ink Business Preferred you can earn a sign-up bonus of 100,000 points (after spending $15,000 on qualifying purchases within three months), which is worth $1,000 in cash. If you use the points for travel expenses by redeeming them through Chase Ultimate Rewards, they’ll be worth even more—up to $1,250.
To get the bonus you’ll need to meet the spending requirement, so consider what you need to charge and how you will manage the bill. You’ll want to pay the debt off by the due date to reap the full benefit of the sign-up reward, so plan ahead.
American Express Business Gold Card: Best for flexible payment arrangements
- Rewards: 4X points on up to $150,000 per year in two select categories your business spends the most in each billing cycle and 2X points on rental cars booked through AmexTravel.com
- Annual fee: $295
- Regular APR: 14.24 percent to 22.24 percent variable
Need to pay for a big marketing campaign or for extra research and development but don’t have the money for it at this very moment? Since the Amex Business Gold is a charge card, there is no preset credit limit, so you can pay for exceptionally large purchases.
You have the option to pay the entire balance in full with no interest added, or use the Amex Pay Over Time plan where you split up large purchases into monthly installments with interest added. This card combines the advantage of a high limit charge card with a credit card that allows for revolving balances.
The Business Platinum Card from American Express: Best for travel
- Rewards: 5X points on flights and prepaid hotels and 2X points on prepaid rental cars when booked via AmexTravel.com; 1.5X Membership Rewards® points on eligible purchases in key business categories, as well as on purchases of $5,000 or more everywhere else (Up to $2 million of these purchases per calendar year ). 1X points on all other purchases
- Annual fee: $595 ($695 if application is received on or after 01/13/2022)
- Regular APR: 14.24 percent to 22.24 percent variable
If you’ll be traveling for your business, you’ll want a credit card designed to help you go places at the least possible cost and in the most pleasant way possible. The Amex Business Platinum is dense with valuable perks, such as up to $200 in statement credits per calendar year toward baggage fees and more at one qualifying airline. Up to $179 back per year on Clear membership and up to $400 in annual Dell credits (Get up to $200 in statement credits between January and June and up to $200 in statement credits between July and December for U.S. purchases with Dell Technologies on your Business Platinum Card when enrolled).
You’ll enjoy Marriott Bonvoy and Hilton Honors elite status and complimentary passes to some of the finest airport lounges in the world. If you spend $15,000 on eligible purchases within the first three months of card membership, the 120,000 Membership Rewards points welcome bonus will be yours.
Ink Business Cash Credit Card: Best for cash back
- Rewards: 5 percent cash back on the first $25,000 on office supplies and telecommunications each account anniversary year, 2 percent cash back on the first $25,000 in combined purchases at gas stations and restaurants each account anniversary year; 1 percent cash back on everything else
- Annual fee: $0
- Regular APR: 13.24 percent to 19.24 percent variable
Need to create a workspace? A business credit card that lets you earn major cash rewards by charging office supplies and telecommunications bills is key. The Ink Business Cash offers 5 percent cash back on the first $25,000 you spend at office supply stores, as well as on internet, cable and phone services every year. If you max those rewards out, they’ll total $1,250 in cash. You will also earn an annual 2 percent back at gas stations and restaurants on the first $25,000 in combined spending each account anniversary year, and if you max that out you’ll earn $500. Anything else will score you 1 percent cash back.
Additionally, it comes with a $750 sign-up bonus after you charge $7,500 in the first three months, plus 0 percent intro APR on purchases for 12 months after opening the account (13.24 percent to 19.24 percent variable APR thereafter).
Capital One Spark Cash Select: Best for 0% intro APR with good credit
- Rewards: 1.5 percent cash back on all purchases
- Annual fee: $0
- Regular APR: 15.99 percent to 23.99 percent variable
With the Capital One Spark Cash Select, you will have 12 months of 0 percent APR on the items and services you need to finance for your startup (followed by 15.99 percent to 23.99 percent variable APR). All you need to do is make your minimum payments each month and pay off the whole balance before the introductory period ends, and your charges will be free of interest costs.
As you charge, you’ll also earn an unlimited 1.5 percent cash back on everything you spend. This card also has less challenging qualification requirements than many other business cards. The credit requirement is “good,” which is defined by the issuer as having not declared bankruptcy or defaulted on a loan in the past five years, and that you have a credit card or loan but have not been more than 30 days late on any payment in the last year.
- Rewards: None
- Annual fee: $0
- Regular APR: 11.99 percent to 20.99 percent variable
If you’ve already acquired a sizable amount of debt for your startup and don’t have the cash to quickly pay it off, an introductory rate balance transfer card could be instrumental in keeping costs to a minimum. The U.S. Bank Business Platinum offers 0 percent intro APR for first 18 billing cycles on balance transfers and purchases made within the first 30 days of opening the card (then 11.99 percent to 20.99 percent variable APR).
Outside of the transfer fee of 3 percent ($5 minimum), no financing costs will be added to balance, so every month your debt will decrease by the same amount as your payment. Just be careful to adhere to the terms, since the deal will end prematurely and the regular rate (or higher) will begin if you pay late, make a payment that is returned or your account exceeds its credit limit.
Is a business credit card right for your startup?
A credit card designed for startups makes sense for most entrepreneurs. It gives you the ability to charge everything from launching costs to monthly operations. Instead of depleting your own savings, which may fluctuate or be limited, business credit cards allow you to use a bank’s deep pool of funds. Your business expenses will be kept separate from your personal expenses, too, which will streamline your accounting and tax management.
A variety of special perks, including sign-up bonuses, rewards programs, no interest for a fixed period of time and flexible payment plans, can also be helpful for startups.
How to choose a business credit card
Not all business credit cards have the same structure or benefits, so decide on the features you want in a card before applying.
- A break from paying interest: Look for a business credit card that offers 0 percent APR for a fixed number of months, whether for new purchases or old debt.
- High limit with flexible payments: A business charge card that also has a flexible payment plan will give you the freedom you need.
- Travel advantages: A card that allows you to earn rewards for flights and hotels and offers credits, upgrades and airport lounge entry will be a good pick.
- Reduce costs: Business credit cards that offer cash back rewards are great for many startups. The money you earn as you charge will keep your costs down since you can use it for statement credits and to purchase necessities.
Some business credit cards have high annual fees, so consider the rewards and benefits and make sure you will get more out of the account than it costs. Also, know that you don’t have to choose just one. A variety of business cards with different features can cover all your bases.
Pros and cons of using a business credit card for your startup
- The best business credit cards have lucrative rewards and valuable perks.
- High credit limits on business cards mean you can charge liberally.
- Business cards can have lower APRs than personal cards.
- Good to excellent credit is usually required for the best business cards, so if your credit is bad to fair, you may not qualify until you improve your credit.
- The high limits can make it all too easy to get into debt. When charging your startup costs, you’ll need to be careful to keep debt in check.
- Unlike personal credit cards, the APR on business cards can change overnight because they are not governed by the Credit CARD Act. Contact the credit issuer and ask when and why it may change the terms.
Business credit cards for startups FAQ
Can I apply for a business credit card when my startup hasn’t made any money yet?
Yes. However, while your startup doesn’t need to be generating revenue, you will have to prove that you have an income source that is sufficient to satisfy the monthly payments on the credit line.
Does my startup need to be incorporated to get a business credit card?
No. As a sole proprietor, you can apply for a small business credit card. You would use your Social Security number rather than an employer identification number.
What happens if my startup dissolves and I can’t pay my small business credit card bill?
You will almost certainly be liable for the debt since most business cards require a personal guarantee. If you don’t make your payments on time, your credit reports will show delinquencies, which will lower your credit scores. If the accounts go into default, you can be sued for the amount outstanding or the credit issuer will send the account to collections.
The bottom line
Business credit cards are worthwhile tools for startups. The key is to get the right one for you and your company, and then to manage it responsibly. After all, while your business may be disruptive, your credit card should be constructive.
The information about the U.S. Bank Business Platinum Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.