What is a Business Credit Card?
Traditional business credit cards are meant for usage by a company or small business owner. Large and small businesses can apply for business credit cards, which can help create a credit profile and improve borrowing arrangements in the future.
Business credit cards can give a variety of advantages. These include cashback or rewards, bonus points, travel rewards, and expense management tools. The key to obtaining the most acceptable business card is determining which features are essential to your business expenses and what you value the most: customized cash rewards, cash back, or credit-building help.
Business Credit Card vs. Personal Credit Card
Business credit cards and personal cards are both types of credit cards, but they differ in several key ways. Understanding the differences between these two types of credit cards is important, especially for those who own a business or are considering starting one.
- Purpose. The cards are designed for use by companies and are used to make purchases related to the business. Personal cards are for personal use and are used for everyday business purchases such as groceries, gas, dining, and more.
- Credit limit. Business cards typically offer higher credit limits than personal credit cards. This is because business credit cards are intended for use by companies that often have higher spending needs than individuals. Higher credit limits can also help businesses manage their cash flow by allowing them to make larger purchases or pay bills over time.
- Rewards and bonus points. Business cards often offer rewards and bonuses that are tailored to the needs of businesses, such as cash back on business-related expenses like office supplies or travel. On the other hand, personal credit cards offer rewards and bonuses that are more geared toward individuals, such as cash back on dining, gas, or grocery purchases.
- Level of liability. Business cards are often tied to the business owner, which means that the business owner is personally responsible for the debt incurred by the business. This is different from personal credit cards, where the individual is responsible for the debt incurred on their card.
- Reporting features. Business cards come with more advanced reporting features, such as itemized receipts and the ability to track expenses by category or by the employee. These features can be helpful for business owners who need to keep track of their expenses for tax purposes or for budgeting purposes. Personal credit cards, on the other hand, typically do not have these advanced reporting features.
Why You Need a Business Credit Card?
A business credit card can provide a number of benefits for both small and large businesses. Here are some of the key reasons why a business card can be a valuable tool for managing business finances.
- Separation of business and personal expenses. One of the primary benefits of a business card is that it allows you to keep your business and personal expenses separate. This can be especially important for small business owners who often mix their personal and business expenses. Having a separate business and personal expenses can make it easier to track expenses, manage cash flow, and prepare financial statements.
- Increased credit limits. Business credit cards often offer higher credit limits than personal credit cards. This is because businesses have higher spending needs than individuals. Higher preset spending limits can help businesses manage their cash flow by allowing them to make larger purchases or pay bills over time.
- Rewards and bonuses. Business cards often have rewards and bonuses that are tailored to the needs of businesses. For example, cash back on business-related expenses like office supplies or travel. These rewards can help reduce business expenses and increase profitability.
- Improved reporting. Business credit cards typically come with more advanced reporting features, such as itemized receipts and the ability to track expenses by category or by the employee. These features can be helpful for business owners who need to keep track of their expenses for tax purposes or for budgeting purposes.
- Improved credit score. Using a business card responsibly can help improve your business's credit score, which can make it easier to secure financing in the future. A good business credit score can also help you negotiate better terms with suppliers and lenders.
- Convenience. A business card can be a convenient tool for managing business expenses. For example, you can use your business credit card to make purchases or pay bills, even when you don't have access to cash. This can be especially helpful for small business owners who are often on the go.
- Improved record keeping. By using a business card, you can keep better records of your business expenses. This can be especially helpful for tax purposes, as you can easily track your expenses and categorize them for tax purposes.
How to Build Business Credit With a Card?
A business card may be one of the most effective instruments for establishing business credit in case you pay it off each month in full, keep the balance low (less than 30% of credit), and make regular, on-time payments.
Register your Company and Get an EIN
First, register your business. The process varies by business structure and location. In certain states, sole proprietors don't need to register but may need a local business license. The IRS offers EINs. IRS requires a business tax ID, but it's not essential to develop business credit.
Request a DUNS Number
DUNS numbers are required for Dun & Bradstreet, one of the three major business credit bureaus. Visit Dun & Bradstreet's website to request a DUNS number. Lenders and other businesses often use this unique nine-digit number to check your credit profile and financial health. A DUNS number is required to apply for a federal grant. You do not need to request a unique identifier from other business credit bureaus, like Experian and Equifax.
Open a Credit Card for Your Business
If you make regular, on-time payments and pay off your card balance each month, you can build business credit quickly. You can get a business card without an established business credit profile since business card issuers use your personal credit. On-time payments and low credit utilization can help you build your business credit score. People with poor credit can look into secured business credit cards, which require a deposit and can typically be upgraded to unsecured cards.
Create Trade Lines With Your Suppliers
Suppliers often extend trade credit, allowing you to pay several days or weeks after receiving inventory. A supplier reporting payments to a business credit bureau can boost your business credit score. Any small vendor, such as your water or office supply stores, can set up trade lines. You can list those vendors as trade references on your account if they don't report to a credit bureau.
Early Payment to Creditors
Your payment behavior determines your business credit score. On-time payments are good, but early payments are better. Paydex scores, which measure a company's payment history, are only assigned to early payers by Dun & Bradstreet. Your business credit score is also affected by the length of your credit history. Maintain relationships with creditors and use less than 30% of available credit.
Borrow From Lenders Who Report to Credit Agencies
You can boost your business credit with small-business loans, but not all lenders report to credit bureaus. Before taking a small business loan, ask the lender if they report. Credit bureaus generally report to banks, but banks have stringent lending criteria and can be hard to qualify for unless you have excellent credit. Most online small-business lenders, including OnDeck, LendingClub, Funding Circle, and Bluevine, report to business credit bureaus, making them more accessible to new businesses and people with poor credit. Other lenders, including SmartBiz, Fundbox, and merchant cash advance companies, do not.
Stay Away From Judgments and Liens
Judgments, liens, and bankruptcy filings negatively affect your business credit score. Unpaid taxes or business debt can cause a lien, allowing creditors to seize your property. Outstanding debt may cause a court judgment against your business. Negative lines on your business credit report can haunt you. For example, bankruptcy remains in your Experian credit history for ten years; tax liens, judgments, and collections remain for almost seven years.
Maintain Your Information With All Three Credit Bureaus
Keep track of your business credit report to ensure it's accurate, just like your personal credit. The three leading business credit bureaus are Dun & Bradstreet, Experian, and Equifax. Verify your business credit score with all three; ensure all trade lines are accounted for, and report any errors, whether it's your address or negative marks on your report.
How to Choose a Business Credit Card?
Choosing the right business credit card can help you save money, increase your purchasing power, and improve your business's financial management. Here are some key factors to consider when selecting a business credit card.
- Rewards and benefits. The rewards and benefits offered by different business credit cards can vary widely. Some cards offer cash back on specific purchases, such as office supplies or travel expenses, while others offer points or miles that can be redeemed for travel or other purchases. Consider the types of expenses that your business incurs and choose a card that offers rewards that align with your spending patterns.
- Annual fees. Some business credit cards charge annual fees, while others do not. Before applying for a card, consider the cost of the annual fee and weigh it against the potential rewards and benefits you will receive.
- Interest rates. The interest rate on a card is the rate at which you will be charged if you carry a balance on the card. Consider the interest rate when choosing a card, especially if you plan to use the card to finance purchases that you will not be able to pay off in full each month.
- Credit limit. The credit limit on a card is the maximum amount you can borrow from the issuer. Consider the credit limit when choosing a card, especially if you plan to make large purchases or if you need to manage cash flow.
- Interest-free period. Some business credit cards offer an interest-free period during which you can pay off your balance without incurring interest charges. Consider the length of the interest-free period when choosing a card, as this can help you manage your cash flow and reduce your costs.
- Customer service. The quality of customer service offered by different card issuers can vary widely. Consider the level of customer service provided by each issuer when choosing a card, as this can be especially important if you need help resolving a problem or dispute.
- Additional benefits. Some business credit cards offer additional benefits, such as travel insurance, extended warranty coverage, or concierge services. Consider the additional benefits offered by each card when choosing a card, as these can add value to your card and help you save money.
- Financial stability of the issuer. The financial stability of the card issuer can be important, as you may be at risk of losing your rewards or benefits if the issuer experiences financial difficulties. Consider the financial stability of each issuer when choosing a card, and choose a card issued by an issuer with strong financial resources.
Choosing the right business credit card involves considering a variety of factors, including rewards and benefits, annual fees, interest rates, credit limit, interest-free period, customer service, additional benefits, and the financial stability of the issuer. By carefully considering these factors, you can choose a card that meets the needs of your business and helps you manage your finances more effectively.
The Best Business Credit Cards
American Express Blue Business Cash Card
The American Express business card provides cash back rewards on eligible purchases. It offers a simple rewards structure, where cardholders earn 2% cash back on the first $50,000 in purchases each calendar year and then 1% cash back on all other purchases. The card has no annual fee, and its APR for purchases and balance transfers is a variable rate currently at 14.49% to 20.49%.
Business owners can add employee cards at no additional cost, allowing them to earn rewards on their business expenses and increase the rewards earned by the business.
The American Express Blue Business Card provides purchasing power to help manage business expenses and cash flow, with the ability to set individual spending limits on each employee card.
Cardholders can easily redeem their cash back rewards for statement credits, direct deposit, or purchase items on Amazon.
The card is integrated with American Express' Corporate T&E Management platform, which provides business owners with the tools and information they need to monitor and manage employee expenses.
In terms of fees, the American Express Blue Business Card has a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater. It also has a late payment fee of up to $40 and a returned payment fee of up to $40.
The American Express Blue Business Cash Card is a great choice for businesses looking for a simple cash back rewards program and the purchasing power to manage their expenses. Its range of benefits and absence of an annual fee makes it a cost-effective solution for small businesses, while its integration with American Express' Corporate T&E Management platform provides a level of control and insight into employee expenses.
Bank of America Business Advantage Travel Rewards World Mastercard
The Bank of America Business Advantage Travel Rewards World Mastercard credit card is a card that offers a business-tier rewards program for travel expenses. Cardholders earn unlimited 1.5 points for every $1 spent on all purchases, with the option to redeem their points for a statement credit to cover travel purchases such as flights, hotels, and rental cars.
The Business Advantage Travel Rewards World Mastercard allows business owners to earn points on all their purchases, making it easy to accumulate rewards for travel expenses. You can qualify for the highest Preferred Rewards.
There is no annual fee. Redeem rewards for cash back as a deposit into your business checking account, as a card statement credit, or as a check mailed to you. Business Advantage Cash rewards don't expire.
Business owners can add employee cards at no additional cost, and all points earned on employee purchases are automatically combined into the primary cardholder's rewards balance.
New cardholders can earn 20,000 bonus points after spending $1,000 on purchases within the first 90 days of account opening.
The card offers zero liability protection against unauthorized purchases and has advanced security features to help protect against fraud.
The APR for purchases and balance transfers is a variable rate currently at 16.24% to 22.24%. There is a balance transfer fee of either $10 or 3% of the amount of each transfer, whichever is greater. Additionally, there is a late payment fee of up to $49 and a returned payment fee of up to $39.
The Bank of America Business Advantage Travel Rewards Mastercard credit card is a great choice for businesses looking for a rewards program for travel expenses. Its unlimited 1.5 points per $1 spent on all purchases and the option to redeem points for a statement credit to cover travel purchases make it a cost-effective solution for businesses that frequently travel. The absence of an annual fee, employee cards, and fraud protection are additional benefits that make it a strong choice for small businesses.
Ink Business Unlimited Credit Card
The Ink Business Unlimited Credit Card is a card that offers a simple, flat-rate rewards program for all purchases made with the card. Cardholders earn unlimited 1.5% cash back on every purchase, with no limit to the amount of cash back they can earn.
The Ink Business Unlimited Credit Card offers a simple rewards program, with cardholders earning 1.5% cash back on every purchase they make.
Business owners can add employee cards at no additional cost, and all cash back earned on employee purchases is automatically combined into the primary cardholder's rewards balance.
New cardholders can earn a $500 bonus cash back after spending $3,000 on purchases within the first 3 months of account opening.
The card offers zero liability protection against unauthorized purchases and has advanced security features to help protect against fraud.
The APR for purchases and balance transfers is a variable rate currently at 15.24% to 21.24%. The card has no annual fee, but there is a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater. Additionally, there is a late payment fee of up to $40 and a returned payment fee of up to $40.
The Ink Business Unlimited Credit Card is a great choice for businesses looking for a simple, flat-rate rewards program. Its unlimited cash rewards on every purchase and sign-up bonus make it a cost-effective solution for businesses that frequently make purchases. The absence of an annual fee, employee cards, and fraud protection are additional benefits that make it a strong choice for small businesses.
American Express The Blue Business Plus Credit Card
The American Express Blue Business Plus Credit Card is a card that offers a simple and flexible rewards program, allowing cardholders to earn 2x Membership Rewards points on the first $50,000 in purchases made each year.
You earn 2x Membership Rewards points on the first $50,000 in purchases made each year and 1x Membership Rewards points on all purchases thereafter.
New cardholders can earn a welcome bonus of 10,000 Membership Rewards points after spending $3,000 on purchases in the first three months of account opening.
The Membership Rewards points earned with the card can be redeemed for a variety of rewards, including travel, merchandise, and statement credits.
Business owners can add employee cards at no additional cost and earn rewards for all purchases made with employee cards.
The card offers zero liability protection against unauthorized purchases and has advanced security features to help protect against fraud.
The APR for purchases and balance transfers is a variable rate currently at 14.24% to 22.24%. There is no annual fee for this card, but there is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater. Late payment fees can range from $40 to $49, and returned payment fees can range from $35 to $38.
The American Express Blue Business Plus Credit Card is a great choice for small businesses looking for a simple and flexible rewards program. Its 2x Membership Rewards points on the first $50,000 in purchases each year and sign-up bonus make it a cost-effective solution for businesses that frequently make purchases. The absence of an annual fee, employee cards, and fraud protection are additional benefits that make it a strong choice for small businesses.
Hilton Honors Business Card from American Express
The Hilton Honors Business Cards from American Express offers a range of rewards and benefits for cardholders.
Cardholders earn 12x Hilton Honors Bonus Points for each dollar spent on eligible purchases directly with Hilton, 6x points for eligible purchases on select business categories, and 3x points for all other eligible net purchases.
New cardholders can earn 130,000 Hilton Honors Bonus Points after spending $3,000 in purchases within the first three months of account opening.
The card offers automatic Hilton Honors Silver status, which provides additional benefits such as a fifth night free on standard room awards and more. Cardholders can also earn Hilton Honors Gold status with $40,000 in eligible purchases on the card each calendar year.
Cardholders receive a complimentary Priority Pass Select membership, which provides access to over 1,000 airport lounges worldwide. Cardholders receive complimentary premium Wi-Fi at participating hotels, which can be a useful perk for frequent travelers. The card offers zero liability protection against unauthorized purchases and has advanced security features to help protect against fraud.
The APR for purchases is a variable rate currently at 14.74% to 19.74%, based on creditworthiness. There is an annual fee of $95 for this card. Late payment fees can range from $40 to $49, and returned payment fees can range from $35 to $38.
Ink Business Preferred Credit Card
The Ink Business Preferred Credit Card is a card offered by Chase Bank. It offers a rewards program for business expenses and several benefits for cardholders.
Cardholders can earn 3 points per $1 spent on the first $150,000 spent in combined purchases on travel, shipping purchases, Internet, cable, and phone services, and advertising purchases with social media sites and search engines each account anniversary year. Cardholders can also earn 1 point per $1 spent on all other purchases. Points can be redeemed for travel through the Ultimate Rewards program, gift cards, or cash back.
The card offers several benefits, including travel and emergency assistance services, trip cancellation and interruption insurance, lost luggage reimbursement, and extended warranty protection. Cardholders also receive access to the Ultimate Rewards program, which offers exclusive discounts and benefits when booking travel through the program.
The card has a $95 annual fee. There are no foreign transaction fees for purchases made outside of the United States. Late and returned payments may incur fees. Balance transfers also incur a fee of either $5 or 5% of the amount of each transfer, whichever is greater.
Consider the rewards, benefits, APR, and fees when choosing a credit card. Make sure you understand the terms and conditions of the card before applying to ensure that it fits your business needs and financial goals.
The Business Platinum Card from American Express
The Business Platinum Card from American Express is a premium business credit card that offers a wide range of rewards, benefits, and premium services for businesses.
The card offers 5x points on flights and prepaid hotels booked through Amex Travel, 1.5x points on eligible purchases of $5,000 or more, and 1x points on all other purchases.
Some of the benefits include access to the American Express Global Lounge Collection, which provides access to over 1,200 airport lounges worldwide, complimentary Hilton Honors Gold status, and access to premium hotel programs such as Fine Hotels & Resorts. Additionally, cardholders can receive up to $200 in statement credits each year for incidental fees such as baggage fees, lounge day passes, and more and receive 35% of their points back when they use them to book a flight through Amex Travel.
The card has a variable APR of 15.24%. The annual fee for this card is $595. There is no foreign transaction fee. Cardholders can also enjoy additional benefits such as 24/7 concierge service, select car rental companies, and premium travel insurance.
Keep in mind that this card is designed for businesses with high spending and is best suited for businesses with a high volume of travel and other expenses.
How to Get a Business Credit Card?
Applying for a business credit card is a straightforward process, but it can take a bit more time and paperwork than applying for a personal credit card. Here are the steps you need to follow to apply for a business credit card:
- Determine your business's credit standing. Before applying for a business credit card, you need to know your business's credit standing. Check your business's credit record and make sure there are no errors that could affect your chances of being approved for a credit card.
- Choose a credit card. Research different business credit card options to determine which one best fits your business's needs. Consider the rewards, benefits, fees, and APR associated with each card.
- Gather information about your business. To apply for a business credit card, you'll need to provide information about your business. This can include your business's name, tax ID number, annual revenue, and the number of employees. You'll also need to provide personal information about yourself, including your name, Social Security number, and address.
- Complete the application. Once you have all of the information you need, complete the credit card application. This can typically be done online or over the phone.
- Wait for a response. After submitting your application, wait for the credit card issuer to process it and provide a response. This can take a few days or a few weeks, depending on the issuer.
- Review the terms and conditions. If your application is approved, you'll receive a credit card agreement with the terms and conditions of the card. Review the agreement carefully and make sure you understand the rewards, benefits, fees, and APR associated with the card.
- Activate the card. Once you receive your card, activate it and start using it for your purchases. Make sure to use the card responsibly and pay your bills on time to maintain a good credit standing for your business.
In addition to these steps, you may also need to provide additional documentation, such as a copy of your business license or a letter from a business partner or owner, to prove that you are authorized to apply for a credit card on behalf of your business.
It's important to choose a business credit card that fits the needs of your business and to use the card responsibly. By doing so, you can help build your business's credit standing and take advantage of the rewards and benefits offered by the card.
