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Find the right small-business credit card with Bankrate
Business credit cards can be game-changing for small-business owners. Accumulating rewards bonuses that maximize your necessary expenditures can help you and your employees conduct business more easily.
If you’re looking to streamline your business-related purchases and earn rewards that can help you save money, a business credit card is a great option. Read our guide to learn all about how these cards can improve your business and which one might be a perfect fit for you.
A quick rundown of the top small-business credit cards
|Ink Business Unlimited® Credit Card
||Unlimited 1.5% Cash Back on business purchases
|Capital One Spark Cash for Business
||Unlimited 2% cash back on all purchases
|Ink Business Cash® Credit Card
||5% cash back on internet, cable, phone services and office supply stores (up to $25,000 a year in combined purchases)
|American Express Blue Business Cash™ Card
||2% cash back on up to $50,000 per calendar year, then 1% (Cash back earned is automatically credited to your statement.)
|The Blue Business® Plus Credit Card from American Express
||0% intro APR on purchases for 12 months from account opening, then 13.24% – 19.24% variable
|Ink Business Preferred® Credit Card
||3x points per $1 on the first $150,000 annually in combined travel, shipping purchases, internet, cable and phone services
|Capital One Spark Cash Select for Business
||1.5% cash back on every day purchases
|Capital One Spark Miles for Business
||2X miles on every purchase
|Bank of America® Business Advantage Cash Rewards Mastercard® credit card
||3% cash back in choice category and 2% cash back on dining (on the first $50,000 in combined choice category/dining purchases each calendar year)
What are small-business credit cards?
Business credit cards are similar to personal credit cards, only tailored to business needs. They can provide businesses with rewards on their everyday spending, help cover expenses during seasonal periods and assist in building business credit, making it easier to borrow in the future and qualify for a lower credit card APR.
How do business credit cards work?
In practice, business credit cards work the same as consumer credit cards: You get approved for a specific credit limit, which serves as your spending maximum. Your available credit decreases as you make purchases, and it increases as you pay off those purchases. Business credit cards often come with rich rewards programs, sign-up bonuses and money-saving perks.
While plenty of cards offer rewards, business credit card rewards are often customized to fit the categories in which businesses spend most, allowing you to save money on common expenditures. Your business credit card can earn rewards for any eligible expenses your business incurs, from copier ink to hotel stays. The rewards typically come in the form of cash back or travel miles.
Depending on which type of card you choose, they often come with additional perks and upgrades, including:
- Airport lounge access
- TSA PreCheck or Global Entry application rebate
- Cellphone and rental car insurance
- Purchase protection
- Travel and emergency assistance
- Free additional employee cards
- Merchant discounts
Types of small-business credit cards
Invest some time in determining the ideal business credit card for your business so that you can reap the benefits with the most value to you. Here’s a breakdown of different types of cards and how they might appeal to you based on your business objectives:
Cash back cards
Good for: Helping small businesses maintain cash flow
Just like personal cards, cash back business cards are a popular choice for business owners looking for simple ways to put money back in their pockets. Some cash back cards offer a straightforward flat rate on all your business expenditures while others have tiered rewards in different categories that may be more useful if they align with your spending.
Travel rewards cards
Good for: Owners who want to offset costs of business trips
If your business requires frequent travel, a travel card is a great way to not only save but also take advantage of perks like lounge access and travel insurance. You can often increase the value of the points you earn on these cards even more by redeeming them through issuer membership programs, like redeeming American Express® Business Gold Card points through American Express Membership Rewards.
Balance transfer cards
Good for: Businesses that need to manage and consolidate debt
If your business has taken on high-interest debts in the past, transferring the balance to a business credit card with a lower APR can help you clear debts more quickly and save money on incurred interest. Business cards are less likely to offer 0% introductory balance transfer rates than personal cards, but you can find some with low variable rates that allow a low or no-fee transfer. Make sure you understand the terms and figure out whether the interest savings are worth any fees you’ll incur. You can run a simulated balance transfer with Bankrate’s Credit Card Balance Transfer Calculator.
Good for: Owners who want to maintain financial discipline
Though they work in largely the same ways as credit cards, charge cards differ from credit cards in that they have no pre-set spending limit. Instead, purchases are approved based on a number of factors in your financial history and you must pay the balance in full each month. Charge cards may be a good option if you have large purchases planned, but make sure your business has the cash flow to cover any charges you make month-to-month. Charge cards are primarily issued by American Express.
Pros and cons of small-business credit cards
More than half (53 percent) of small employers use credit cards on a regular basis, according to the Federal Reserve’s 2020 Small Business Credit Survey. Business credit cards can be a great tool for managing your business’s cash flow, earning rewards and staying organized, but they aren’t for every situation. Like any form of credit, there are benefits and drawbacks.
Pros of small-business credit cards
- It can be easier to qualify for a business credit card than a line of credit or a bank loan.
- Using a business credit card responsibly can increase your business credit score, which looks better to vendors and can get you the best interest rates on business loans.
- They usually provide higher credit limits than consumer credit cards.
- A business credit card can help address cash flow concerns.
- Keeping business expenses separate from personal makes tax records simpler to unravel.
- Some card issuers have deferred payment policies tailored to the demands of operating a business.
Cons of small-business credit cards
- You may be personally liable for any unpaid debt on the cards, which can affect your personal credit score.
- Business cards generally have higher fees and interest rates than personal credit cards.
- Business credit cards are not required to offer the same consumer protections as personal cards under the Credit CARD Act of 2009, which can lead to unexpected fees and interest rate increases.
How to choose a small-business credit card
- Assess your spending. Be aware of the categories you spend in most frequently in order to choose a card with rewards that will maximize those expenses.
- Sum up your expenses. Look at your spending history and what you expect to spend annually to determine whether a card’s annual fee is worth its rewards. An easy way to get a rough estimate is to multiply one credit card statement by 12.
- Plan ahead. If you know there may be times when you risk carrying a balance, whether you’re anticipating periods of slow growth or you’re planning a large purchase to grow your business, you should prioritize a low standard APR card to help mitigate interest payments.
- Check out additional card perks. Look further than cash back percentages and points rewards to see what else a card has to offer, from airport lounge access to free additional employee cards and other tools that can help your business grow.
How to apply for a small-business credit card
The business credit card application process is similar to applying for a personal credit card, but not entirely. Here are a few things you might want to prepare for:
Submitting your information
When you apply for a business credit card, the information an issuer asks for may differ depending on the type of business. Regardless of how your business is structured, though, issuers will be looking for signs of good financial health and at least good credit, though there are a few business credit cards for bad credit.
As a sole proprietor or freelancer, you’ll likely only need to provide the same personal information required for personal credit card applications, including your name, Social Security number (in some cases you may use an employer identification number instead), address and income.
As an LLC or corporation, be ready to provide:
- Your personal information
- Information about your business, including name, tax identification number, address and business income
- Additional information and documents related to your business for verification after receiving an initial approval
- A personal guarantee stating that you’re personally willing to assume liability for any debt your business incurs. This is required by most business credit cards, with a few exceptions.
Always be sure to also provide all documentation the issuer requests, or you’ll risk your application being discarded.
Be aware of effects on your credit score
Regardless of your business type, the issuer will also pull a hard credit check on your personal report, even though the business line of credit will be separate from your personal accounts and won’t affect your personal credit utilization rate.
Similar to applying for personal credit cards, you should evaluate your financial health before submitting any applications. Evaluate the length of your credit history, whether you have any negative activity on your report and your credit score itself. Don’t apply for any cards that you know you’re unlikely to qualify for, as too many applications in a short time period can affect your score negatively.
Tips on how to use small-business credit cards
- Establish spending guidelines to ensure you don’t take on high-interest debt using your business credit card.
- Outline what constitutes a business expense, set your own spending limits outside of the designated credit limit and have a system in place for tracking purchases to ensure adherence to the rules.
- If your business is made up of multiple employees, have a clear policy in place to decide who will receive an employee card. Most importantly, communicate all policies and guidelines across the business.
- Use your card responsibly, but don’t forget to actually use it. Especially if your card charges an annual fee, you’ll want to ensure you’re maximizing your rewards and getting the most value out of your spending.
- Stay diligent in keeping your personal expenses separate from your business expenses to simplify bookkeeping.
- Don’t let your cash back or rewards points expire. Redeeming your rewards regularly can ensure that cash back or points value is invested back into your business rather than going to waste.
Expert Q&A: Monica Eaton-Cardone
Monica Eaton-Cardone is the COO and founder of Chargebacks911, an industry-leading chargeback remediation firm. In addition to COO, she holds the titles of speaker, entrepreneur and author. She is a tireless advocate for the role of women in IT and business leadership. We spoke with Monica about what a successful business looks like in terms of credit.
What tips do you have for building and maintaining good business credit?
As with personal credit, the underlying principle here is to convince lenders that you’re a reliable, stable entity who’s worth their investment. Many of the things that boost your business credit will be in line with that goal.
Ensure that your business can be found easily on Google, as well as on social media, and that you have a professional presentation. You’ll also want to try to establish a good rapport with vendors, as they may be more willing to extend credit to you at first. Incorporating your business as an LLC can also be very helpful, as it makes the business legally distinct from you as an individual.
Finally, once you are able to secure credit cards and other lines of credit for your business, you need to maintain what you’ve established. This means paying all bills on time and in full. Plus, just like with your personal credit, you need to monitor your reports on a regular basis, and ensure that they are free of errors.
What are some things to avoid when it comes to choosing a small-business credit card?
Some small businesses tend to shy away from cards that require an annual fee. This would be a mistake; if you want a business card, you can’t simply write off any card that requires an annual fee, as these charges are common practice for business cards. In line with what I mentioned earlier, you need to weigh the benefits against the cost of the card, and see if it plays to your advantage.
You also need to figure how many cards you should have at once. Having multiple cards can be a good move, as it increases your available credit and lowers your credit utilization ratio. That said, you don’t want to apply for every card out there, as each application triggers a hard inquiry on your credit, which means your score will take a slight hit.
Do you have a favorite business credit card? If so, why?
Again, it will vary based on what I’m using it for. I have several business cards that we use for different things, like booking travel, buying supplies, or organizing events. That said, I think the Capital One Spark Cash for Business offers a good “bang-for-buck” for small businesses.
The card offers a flat, unlimited 2% back on purchase, plus a $500 bonus if you spend $4,500 in the first 3 months. There’s a $95 annual fee, but it’s waived for the first year, and between the cash back welcome bonus and the standard 2% back, it shouldn’t be long before it pays for itself.
Business credit scores vs. personal credit scores
In many ways, a business credit score serves the same function as a personal credit score. Its main purpose is to let lenders know whether a business has been a trustworthy borrower in the past.
Why your business credit score matters
Since you technically can lean on your personal credit for some business pursuits, you may wonder why your business credit score even matters. For an insider’s take on the matter, we reached out to Brian Bond, senior vice president of Product, Marketing and Strategy for Experian Business Information Services.
“Business credit is established on day one, so businesses should be thinking about how they want to improve and maintain their scores as soon as possible,” says Bond. “Lenders use businesses credit scores to gauge financial risk. It can determine whether they receive a loan, the interest rates they’re given, and if vendors will want to work with them. A good credit score can offer greater financial opportunities and affect a business’s ability to obtain capital, so it’s important for them to regularly monitor and keep up with their scores.”
Beyond business matters, there are personal reasons to set credit boundaries too.
“It’s important for small business owners to separate business credit and personal credit for a few reasons,” says Bond.
“If your business ever becomes at risk, your personal credit score becomes at risk as well. Maintaining separation can protect your personal credit profile should a financial mishap occur in the company, and vice versa. ”
How does a business credit score differ from a personal credit score?
While serving the same function, business and personal credit scores have a few key differences.
- The business credit score range is smaller. While personal credit scores are between 300-850, business credit scores are typically between 0-100.
- The credit reporting agencies and scoring systems are different. The three primary reporting agencies for business credit are Dun & Bradstreet, Experian and Equifax. They all use different scoring models, so your score may vary greatly between agencies.
- Business credit is public, while personal credit is not. Anyone can look up your score through the business credit reporting agencies.
- Business credit scores are tied to an EIN (unless you are a sole proprietor and do not have one), unlike personal credit scores, which are tied to your Social Security number.
What is the highest-paying business cash back card?
That question doesn’t have a truly definitive answer, mainly because of the way cash back credit cards work. Some offer unlimited earnings on general purchases at a relatively low flat rate, while others feature higher rewards rates in special categories limited by spending caps.
However, we can offer a detailed analysis of several business cash back cards available from our partners to help you make your own decision.
Flat-rate with spending caps
The American Express Blue Business Cash Card has a rewards structure similar to that of the Capital One Spark Cash for Business — similar, yet not identical. The Blue Business Cash earns 2 percent cash back on all eligible purchases, but only on up to $50,000 per calendar year, after which the rate slides to 1 percent. Cash back earned is automatically credited to your statement.
If you made $50,000 in purchases with this card in a calendar year, you’d earn $1,000 in cash back at that 2 percent rate. You would continue to earn after reaching the $50,000 limit, but at the reduced rate of 1 percent.
All things considered, the potential to earn at least $1,000 in cash back per calendar year should hold some appeal for just about any small business owner.
Tiered categories with spending caps
Things get a little more complex with the Bank of America Business Advantage Cash Rewards Mastercard credit card. It has two bonus cash back categories, but your combined earnings in those categories have a $50,000-per-calendar-year limit. The card also earns 1 percent cash back on all other non-category purchases.
|3% choice, which you can select from a list of six options including office supply stores and travel
||Combined $50,000/per calendar year with dining category
|2% on dining purchases
||Combined $50,000/per calendar year with choice category
|1% on all other purchases
The most cash back you could earn in the combined choice/dining categories in a calendar year would be $1,500 ($50,000 at 3 percent). You would also earn an unlimited 1 percent cash back on eligible purchases outside the bonus categories.
If your business spends a lot of money on purchases in the choice and dining categories, you could earn cash back at a significantly faster rate with this card than with most others — at least until you hit the $50,000 threshold. Overall, this Bank of America card (which has no annual fee) could generate a tidy sum of cash back for a particular kind of business owner.
Small-business credit cards vs. corporate credit cards
Small-business credit cards and corporate credit cards can both achieve the same goal of financing a business. However, they’re designed for different types of businesses. Corporate credit cards are usually only accessible to larger businesses with millions in annual revenue, while small-business credit cards are designed for all types of small-business owners.
In general, corporate credit cards are much tougher to get. Corporate cards typically require the business to have good credit, several million in annual revenue, and a certain number of authorized cardholders. Also, the card issuer often conducts a financial audit before approving or denying the corporate card application.
Small-business cards have much fewer barriers to entry. With good personal credit, some basic information about your business and the willingness to provide a personal guarantee, you’re eligible for many of the best business credit cards.
Lastly, there are some key differences in how debt liability works. With small-business cards, the debt burden always lies with the primary cardholder – the person provided the personal guarantee. With corporate credit cards, liability may fall solely on the business or be shared between all authorized cardholders.
Those are the largest differences, but check out our full comparison of corporate and small business credit cards for the finer details.
How we choose our top business card selections
While we consider all aspects of a credit card when calculating the 5-star Bankrate score, the criteria for business cards emphasize features most valued by business owners. Scoring on this page places a weighted emphasis on factors including:
APR (Annual Percentage Rate)
Some cards offer lower variable APRs, while others allow business owners to manage debt from large purchases or other credit accounts with 0% intro APR offers.
When evaluating each card, we consider both the earning structure rate and corresponding redemption values that a small/medium business owner can expect with every eligible purchase.
Bonuses, discounts and perks
For each sign-up bonus or welcome offer, we compare the spending requirements with the redemption value that each card brings to the table. On top of the bonus, we layer in additional perks like free employee cards and rental car insurance to calculate the total expected value.
More research on credit cards for businesses
If you want a deeper look into how each card may serve your business’s needs, check out our expert reviews on all of the major business credit cards on the market today.
Stay in the know and get informed with the latest business credit card news and advice.
More info on rates and fees for the American Express® Business Gold Card.
Senior Editor Barry Bridges has been writing about credit cards, loans, mortgages and other personal finance products for Bankrate since 2018. His work has also appeared on websites including Nasdaq.com, Zillow.com and The Simple Dollar. He was previously an award-winning newspaper journalist in his native North Carolina. Send your questions about credit cards (and fantasy baseball) to firstname.lastname@example.org.
Mariah Ackary is a writer for Bankrate.com, specializing in rewards and small businesses. Through her research and advice, she strives to make financial education easier and more approachable. Send your questions to email@example.com.
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