Business Credit Cards of September 2023

What is a business credit card?

A business is a risky and resource-intensive activity that sometimes requires more than you can invest from your resources. Credit tools bridge this gap between necessity and production. For example, a credit card is a convenient means to access a lender-approved line of credit.

Business credit cards are issued to meet business needs that differ from personal spending, and approval is based on the borrower's personal creditworthiness and the creditworthiness of the business. Business credit cards make it possible to provide trusted employees with financial resources to pay bills related to business activity.

Some customers view credit cards as a tool that does not really matter what you pay for as long as you make regular or minimal payments. However, this is not quite the case with business credit cards, so it is necessary to clearly distinguish between personal and business expenses. For example, suppose one should pay for business expenses with a personal credit card. In that case, such transactions could be penalized with a further suspension of the credit limit and blocked because they violate the payment criteria for personal credit cards established by lenders.

Using a business credit card affects business credit scores, while improving personal credit scores does not increase business credit scores. It is worth mentioning that business credit cards impose a dual responsibility for using credit funds because if there are delays in payment, etc., this will affect not only the creditworthiness of the business but, in some cases, the creditworthiness of the owner.

A business credit card is more complicated than a personal credit card because even setting the limit depends on many more factors, such as the company's financial status, financial reporting, cash flow, etc.

Business credit cards have advantages that banks offer their customers, such as a higher drawing limit. Still, at the same time, the grace period (0% on the amount borrowed) is shorter for business cards than for personal credit cards. Higher account limits offset a shorter grace period (typically 0% APR ) for business credit cards.

Business credit cards allow using a credit line and pay only for the used part thereof.

Business credit cards are the first step to a credit product of a higher class: corporate credit cards. Both are intended for businesses but differ in the amount of sales. If the applicant doubts whether they are eligible for a corporate credit card or a business card, there is a simple rule: if the company's sales are not in the millions, it is a business credit card.

Interest rates for personal and business credit cards are pretty much the same, but there are features within business or personal credit cards that can differ strongly. Therefore, it pays to look around and find out which credit product from which bank or another card issuer best fits your expectations.

Knowing that business needs vary, card issuers offer an extensive selection of business credit cards to offer higher premiums. For example, a company that does a lot of business travel would want miles rather than cash back on office supplies. On the other hand, if a company needs a lot of office supplies for presentations and conferences, it can use some money to get additional funds and allocate the company budget wisely.

Types of business credit cards

Business cards make it possible to relieve cash flow and spread the company's expenses more evenly. Also, business credit cards are a great tool to earn rewards and redeem them. On the business scale, rewards make pretty good amounts because the limit for credit is much higher than personal credit cards and the spending amounts are also higher.

Business cards can be categorized according to different criteria.

According to the card's status, there are basic and premium cards, and the latter offer more functions and, of course, have stricter requirements.

According to the payment system behind the card, most are known as:

• Visa;

• MasterCard;

• American Express.

Here are the major reward types:

• cashback cards allowing you to earn bonus points on eligible gas purchases, groceries, car rentals, internet bills, streaming, travel, and other purchases;

• travel cards that allow you to earn extra miles and give access to airport lounges for making any eligible purchase;

• credit cards with lower interest rates will enable you to lower the cost of your credit line.

Some cards offer a good mix of welcome points and cash-back rewards.

According to the credit card issuer, the cards may be issued by a bank, a credit union, or an alternative financial organization.

Best business credit cards

Reviews of the best business cards indicate that among the best offerings on the market are the following:

American Express Business Platinum card gives a generous welcome bonus of over 100,000 points, with required spending within a quarter of only $7,000. This card has an annual fee of almost $500 and fees for additional cardholders, but it offers a variety of benefits such as:

• Worldwide access to over $1 000 airport lounges for two people, hotel upgrade and VIP status, and of course, 24/7 personal assistance in the concierge service.

• The bonus redeeming ratio for this card is that the ratio is attractive, 1:1.

• From the point of view of business security, there is an essential feature called employee card misuse protection, and each purchase earns more than one bonus point. The annual fee could be considered a disadvantage, but it is tax deductible.

American Express Business Edgecard is a bit less prestigious, but it allows you to enjoy substantial bonuses as well:

• a welcome bonus of over 45,000 points;

• an annual fee of around 100$;

• the purchase rate is less than 20%, and if a payment is missed, the rate increases almost to 30%;

• additional cards are free of charge.

Such a card can be affordable even for a small business, offering the same $100,000 employee card misuse protection and travel protection insurance.

1. American Express Marriott Bonvoy Business Card is one of the best hotel cards. It gives you a 75,000-point welcome bonus when you pay as little as $150 annually. Additional cards are affordable because there is only a $50 fee for each new card. This card is an excellent solution for free business travel, it allows you to earn points for the purchase of gas for business cars, and one night's hotel stay is free each year. In addition, the annual fee is tax deductible, and the card protects the business owner with $100,000 in employee card misuse protection.

2. The American Express Business Gold Rewards Card has the best welcome bonus, equivalent to 110,000 points, 70,000 of which become available when net purchases made with the card exceed $5,000 in the first three months of account opening. In addition, with this card, you can benefit from special travel and insurance programs and an additional annual hotel credit of $100. However, this card has a drawback associated with the fact that there is only one significant bonus, and collecting more rewards is not so efficient for this product. Therefore, if earning points is essential to the applicant, other alternatives should be explored before applying for this card.

Among small business credit cards, some are rated as good according to open sources, for example:

1. Ink Business Cash credit card (Visa) with no annual fee, 1-5% cash back depending on purchase category (office supplies, gas stations, restaurants, combined purchases, etc.). Still, the cashback bonus has a cap and an annual fee of over $100.

2. Capital One Spark Cash Plus card offers up to a $1,000 cash bonus in the first six months and 2-5% cash back.

3. TD Business Cashback Visa with no annual fee and 19.99% on purchases and the same interest rate on cash advances and transfers at 22.99%.

4. With the TD Business Select Visa, you can enjoy annual fee rebates and pay only 11.99% for cash advances and purchases.

5. BMO business credit card offers a welcome bonus of over 100,000 points; the cash advances rate below 24%; for the first months, the cashback is as high as 10% per every dollar spent; it supports up to 22 cards and up to 25% rebate for selected stores, 90 days of purchase protection and warranty protection up to one year.

A business credit card is possible if an applicant has additional income besides their regular job. From this perspective, almost every adult in Canada is eligible for this type of credit card because many people get extra money from part-time or online jobs.

There are two more essential categories of business credit cards Canada allows to get:

• charge cards (the balance has to be repaid every month);

• credit cards where there is no obligation to pay within the billing period of one month.

The best business credit card is the one that meets your needs and abilities to service it the best among other options offered on the market. It can be a BMO Cashback Business MasterCard, a BMO Business Credit card, a small business credit card, or any other that allows you to gain reward points and travel insurance, and travel rewards if you need such features for your business activity.

Business credit cards features

Business credit cards are rich in welcome bonuses and other features compared to personal credit cards. One of the reasons why this is so is that businesses usually have higher expenses than individuals.

With business credit cards, you can get a high welcome bonus and redeem it twice if you have both types of cards, personal and business. The welcome bonus can be as high as a few thousand dollars.

With business credit cards, you can earn points faster because the index of the reward calculation is higher. Some cards have triple, double, and regular indexes for bonus calculation, depending on the spending category of everyday business expenses.

Using a business credit card allows small businesses to get good business credit scores which might be needed for significant purchases.

Getting a business credit card is easier than being approved for a classical business credit line. A credit card saves time, requires fewer documents, and allows you to avoid checking the purpose of using the loan. Usually, amounts approved by the card issuers are sufficient to finance a new vehicle or some day-to-day expenses connected with the business activity.

Unlike standard personal credit cards, business cards offer higher credit limits, up to ten times higher than the personal credit limit on a card issued for personal use. Businesses often have several employees and might also need credit card access. However, some employees are not transparent with using credit funds, which may generate risks for the business owner, affecting their credit score. With business cards, there is a tool for ensuring the employer from employees’ misuse of the funds.

Business cards offer better purchase coverage and extended warranties.

Another feature is that it is possible and legal to use a business credit card, and it's welcome bonuses for personal expenses financing.

How do business credit cards work?

Credit limit

A business credit card comes with a credit limit, and the borrower, the company that received the card, pays for using the limit. Once the amount is repaid, the limit amount used can be approached again. This card has a higher spending limit and is issued to a business or person with an additional income besides their main job.

Thus, the cardholder or additional card user pays for goods and services with the card. Additional users may have internal payment limits set by the business owner within their financial means, but this possibility depends on the card product features offered by the card issuer.

Monthly billing period

The use of the card and the payments for the exhausted credit limit are linked to the payment or billing cycle. The amount due can be seen in the monthly statements issued by the card issuer and sent to the company. If there is an online banking or mobile app, it is possible to check such figures more frequently than once a month. Still, access to the system could be granted only to some additional cardholders or only to the accountant or finance director. This depends on the company structure and job descriptions and is determined by internal procedures.

As a rule, the balance must be paid in full each month, including accrued interest, and this procedure is similar to that of personal credit cards.

Employee cards

Since business cards can be used by multiple users and repayment is handled by the company, it is an important feature offered by banks and other credit card issuers that provides significant coverage against employee misuse of the cards. With many products, such insurance is available for up to $100,000 and helps stay safe if an employee misuses the card for their own purposes.

Perks

Business cards have a welcome bonus and the possibility to get bonuses; top cards of premium level offer the possibility to have VIP hotel status, room upgrade, and extra miles. This is a very important feature for businesses associated with free business travel.

According to the available information, business owners can split their expenses between personal and business credit cards and improve their credit score, as the use of the limit per customer can be lowered in such a case.

Where to get a business credit card in Canada

Since business credit cards are popular in Canada, it is possible to obtain this product from multiple issuers:

• government-regulated banks;

• other types of banks;

• credit unions;

• other issuers.

Payment systems such as Visa and MasterCard do not issue the cards directly but work with partner financial institutions that promote their products and determine which features belong in which package.

It is possible to fill out an online application and then communicate offline with the card issuer or to submit the application completely offline at a branch.

A physical card can be applied at a branch and sent to you by mail.

How to choose and apply for a business credit card in Canada

When choosing the right card, take time to compare offers and available packages to find the right features to meet business needs. If it's a new, high-risk business with unpredictable cash flow fluctuations, annual fees, and high-interest rates can be a burden. With some cards that even have a yearly fee, this is offset by no fee or a lower fee for each additional card user. This can result in significant savings if many employees travel on business.

Take your time, consult with a bank or financial advisor to find the right product to make your financial life more accessible, and do not neglect credit card calculators to help you estimate the costs you will incur in the future to maintain and use the card.

The card issuer provides full information about expense management tips, eligible purchases, complimentary access rules, changing spending categories, travel rewards programs, and cashback rules.

The better the company's credit score and payment history, the lower the interest rates offered by the card issuer. However, this is true for all loans and credit cards.

Review the rewards program offered by the cards you selected. The ways you can redeem points, as sometimes the redemption opportunities are limited to certain companies.

Account opening is easy for all payment systems: American Express, Visa card, and MasterCard.

If you have a business credit card, it is essential to check expenses, tax deductions, and tax season to reflect all figures correctly.

Annual spending should be available to service the debt, especially if the business has multiple cards and different billing periods.

Note: make sure that account information is correct because otherwise, it might be a fraud attempt.

Before applying for a business credit card, some preparations will help in selecting the right card:

1. Review the cash flow of your business, when you have ups and downs, what amounts are needed most, and the nature of your cash flow - steady or subject to seasonal fluctuations;

2. How many employees do you have, and who has the right to use a business credit card? How many additional cards would you need for your employees? If you need any additional card, you should look for lower fees among the offers in the market.

3. Does your business involve frequent business travel? If so, what type of transportation do they use? If you need to travel frequently by air, extra miles and access to business lounges, hotel room upgrades, etc., are beneficial features of a business credit card.

4. Do you need to use cars for your business? If you need to use a vehicle often consider the card with bonus points for getting petrol, etc. This way making everyday business purchases, you would gain redeemable rewards.

5. If you are interested in cash back, check whether the bank sets up limits on rewards.

Business credit cards may have some restrictions on payments. For example, it should not be used for:

• Payroll;

• Debt consolidation;

• Lease payments;

• Specific invoices or vendors do not fall under the eligibility criteria.

Choose a credit card with a maximum amount that meets your needs and that you can serve simultaneously to ensure that the amounts due are repaid within the billing period.

Requirements

There are general criteria for credit approval in Canada, but business credit cards have basic requirements and specific ones related to the business.

• The applicant should be of legal age and able to sign legally binding documents;

• The applicant should be a Canadian citizen or have permanent resident status;

• The business should belong to one of the four business structures permitted in Canada (sole proprietorship, general partnership or limited partnership, private or public corporation, cooperative) or, as some open sources state, the applicant should have an additional source of income in addition to their primary occupation. Sole proprietors are also eligible, but registration documents are required.

• Evidence of personal and business credit must be provided;

• Documents confirming creditworthiness, sources of income, earnings, etc.

To apply for a business credit card, one should provide the following:

• Personal information;

• Cell phone;

• Social security number;

• Date of birth;

• Contact details (email address, phone number, etc.);

• Name of the business, registration information;

• Number of years in business;

• Business number and social security number (for sole proprietors);

• Number of employees;

• Usually, the business owner must sign a personal guarantee, which means that if there are problems with repayment from the business's income sources, the business owner must use their funds to repay the debt.

The card issuer (a bank or other institution) would require articles of incorporation, a certificate of registration, a license if needed and available for the type of business, a partnership agreement, and financial statements.

Note: Some card issuers may not require proof of registration as a sole proprietor, but income sources will still be verified.

Pros and cons

Pros

• It is possible to get a business credit card even without having a big business; extra income besides your regular job can be a reason to apply for a business credit card;

• the application procedure is quite simple;

• it has a higher credit limit than a personal credit card;

• there are fee-based and credit-based business cards, and the applicant can choose which option is better: carry the balance from month to month or pay it back within the billing period;

• there are good welcome points and a wide choice of bonus categories;

• it is possible to get VIP status and a room upgrade in the hotel;

• it is possible to get additional cards for the employees;

• there is insurance against financial abuse by employees by means of a business credit card;

• there are low-interest cards and special interest periods. Even though these are usually shorter than those of private credit cards, they can still be sufficient to close a liquidity gap and save on interest costs;

• it is possible to use it for business expenses and get rewards while doing the regular activity;

• different types of business credit cards may fit business expenses peculiarities (business trips, using of vehicle, inviting business partners to restaurants; frequent flights and hotel stays, etc.);

• it is possible to build up a credit history for one's own business.

Business credit card advantages are numerous, but not all can be combined in a particular card.

Cons

• In most cases, confirmation of business registration is required;

• some cards have an annual fee;

• additional cards have a fee;

• it is usually required that the business owner provide a personal guarantee of repayment of the amount due under the credit card, and if the business is not very good and the card is charged, the outstanding balance must be repaid from the business owner's funds at the end of the billing period;

• according to some sources, it is possible to use a business credit card for personal expenses, but if the card issuer has strict policies against it, the card may be blocked for violating the policies;

• if payments are late, the interest rate will be higher;

• Balance transfers may have a high cost;

• if the debt is not paid correctly, there is a risk that the credit score will drop drastically, and the debt, including penalties, will increase.

There are some drawbacks to business credit cards, and the borrower should weigh the risks to avoid excessive spending and penalties, but if the card is chosen correctly, it can be a great tool to manage expenses and balance cash flow high lows.