How to Choose (and Use) a Small Business Credit Card

By Amanda Smith on July 25, 2018

Every small business has expenses. Printer paper. Plane tickets. Coffee with clients.

Since you’re going to be spending all that money, you may as well get something out of it. The right small business credit card can help you simplify your bookkeeping, boost your spending power, earn rewards, and build credit.

We’ll walk you through how to choose the right credit card for your company—and avoid some common pitfalls along the way.

What exactly is a small business credit card?

Small business credit cards work just like any other credit card: buy stuff now, pay for it later. But they also have features just for small business owners—things like travel benefits, bonus rewards for business purchases, and ways to track and manage spending.

Why would you want one?

1. Keep your business expenses separate

The most obvious benefit of having a dedicated business card: keeping your business expenses distinct from your personal expenses. It means at tax time you won’t have to spend hours sorting everything into business and personal buckets for your accountant.

2. Track and manage your expenses

There are few tasks more tedious than tracking expenses. Fortunately some cards have associated apps that let you tag purchases as you make them and even attach a picture of your receipt. These features, along with integration with bookkeeping software, make monthly tracking (not to mention tax time!) that much easier.

Many small business cards also make it simple to issue employee cards, as well as to monitor and limit the spending on them. Bonus: you’ll earn rewards that you’d miss out on if employees used their own cards.

3. Cover the cash flow crunch

Credit cards can save your butt in a cash flow crunch. Like when you have to pay the bills today, but your invoice won’t get paid till next week.

In that case, you could pay the bills with a credit card today, and pay it off next week when you get paid. Business credit limits are way higher than personal credit cards (usually starting around $50,000 or more). And a credit card is easier to get than a line of credit.

Some business cards come with flexible payment terms or introductory offers, such as 0% APR financing for new accounts—which means you may not need to pay interest for a year or more. If you know you can pay off a large purchase within the introductory period, it amounts to a free loan.

4. Bask in the rewards

Banks are competing for your business, which means business cards often have killer perks.

Some help you earn points faster, including welcome offers and bonus rewards on big purchases or things like office supplies, plane tickets, Facebook advertising and office WiFi.

Others can make travelling easier, letting you speed past security lines, relax in airport lounges, or get free hotel stays or upgrades.

And, of course, there are cash-back cards, which earn you money that goes back on your card or directly into your bank account.

5. Build credit for your business

It may not be as sexy as travel perks, but having a good credit score has real-life impact. Paying your credit card bill on time each month is the most important factor in building credit—which, in turn, determines whether your business qualifies for loans, good vendor terms, office or equipment leases, and low business insurance rates.

6. Get automatic insurance on things you buy

You take on enough risk as a business owner. Having a business credit card can reduce it in at least one area. When you pay for things on your business credit card, they’re often automatically protected against things like theft and damage. Sometimes you even get an extended refund or warranty period. This comes in handy for big purchases like laptops or equipment for your business.

Many cards also carry insurance for trip cancellations, delays, accidents, lost and delayed baggage, and car rentals. One less thing to think about.

Types of cards

You might use the terms “corporate card” and “business card” interchangeably, but they are actually quite different: small business cards are issued to a specific individual—usually the business owner—who provides a personal guarantee. Corporate cards are issued to big corporations; the corporation, rather than an individual, is on the hook if they fail to pay.

We’re rooting for you to one day reach corporate card status (if it’s in your long term plan), but in the meantime, you have a couple alternative options as a small business owner: a credit card or a charge card. Here’s a breakdown of the key differences between the two:

Credit Card Charge Card
Has a pre-set spending limit.
If you go over, you’re on the hook: you’ll get a fee or your card will be declined.
No pre-set spending limit.
Gives you the flexibility to make larger purchases without requesting a credit increase.
Lets you carry a balance from month to month, as long as you make the minimum payment.
If you carry a balance, you’ll be charged interest and it may affect your credit score.
Requires you to pay your balance in full every month.
If you don’t, you’ll pay a steep penalty (usually 3% of the balance) and your issuer may suspend your credit.
Easier to qualify for. More difficult to qualify for.

Pick the right card for your business

Here are four questions to consider to help you pick the right card.

1. Will you pay off your card each month?

  • If so, kudos to you. You might consider a charge card, which gives you the flexibility to spend as much as you need without worrying about fees for going over a limit.

  • If you know you’re going to carry a balance—for instance, if you need to make a big purchase and pay it off over time—look for a credit card that offers a promotional 0% APR or flexible payment terms.

2. How much do you spend each month—and on what?

  • The annual fee on some cards can be as high as $450, so you need to know your spending will earn you enough rewards to make it worthwhile. If your expenses are low, you may want to sacrifice some bells and whistles and opt for a no-fee card instead.

  • Similarly, many welcome offers have a minimum spending threshold. If you don’t hit the threshold, you won’t get the rewards bonus.

  • If you’re spending a lot on a specific type of expense—office supplies, restaurants or travel, for example—you can look for a card that offers bonus rewards for that type of purchase.

3. The fun part: what rewards do you want?

  • If you’re loyal to a specific airline or hotel, a co-branded card might give you the most bang for your buck.

  • Other points cards give you the flexibility to redeem rewards with many different travel partners by transferring points to other loyalty programs.

  • If you’d prefer to keep it simple, a cashback card puts money back on your card or straight into your bank account.

  • Pay special attention to welcome bonuses—these promotional offers can translate into hundreds of dollars in rewards.

4. Does the card you want have the features you need?

  • Can you issue employee cards without a fee?

  • Is there a system for tracking and managing spending?

  • Are there any foreign transaction fees?

  • What kind of purchase protection and insurance perks are available?

2018’s best business credit cards

Haven’t got the time to spend hours on Google comparing credit card offers? Here are a few well-reviewed cards to speed up your search.

For cash back

Chase Ink Business Cash Credit Card

chase business cash

  • Sign up bonus: $500 bonus cash back if you spend $3,000 in three months

  • Earn 5% cash back on the first $25,000 spent at office supply stores and on internet, cable and phone services each year; 2% cash back on the first $25,000 spent at gas stations and restaurants each year; 1% cash back on all other purchases

  • 0% introductory APR for 12 months on purchases and balance transfers

  • Employee cards at no additional cost

  • No annual fee

Capital One® Spark® Cash for Business

spark credit card

  • Sign-up bonus: $500 cash back if you spend $4,500 in three months

  • Earn 2% cash back on all purchases so you don’t have to remember bonus categories

  • Employee cards at no additional cost

  • $95 annual fee after the first year

For travel

Chase Ink Business Preferred Credit Card

Chase-Ink

  • Sign-up bonus: 80,000 points if you spend $5,000 in the first three months

  • Earn 3 points per dollar on the first $150,000 spent on travel, shipping, social media advertising and internet/cable/phone services each year; 1 point per dollar on everything else

  • Points can be redeemed by transferring them to many different airline and hotel partners

  • Employee cards at no additional cost

  • $95 annual fee

The Business Platinum® Card from American Express OPEN

business platinum AMEX

  • Sign-up bonus: 50,000 points if you spend $10,000 in the first three months; another 50,000 points if you spend an additional $15,000 in the same period

  • Earn 5 points per dollar on airfare and prepaid hotels booked through American Express Travel; 1.5 points per dollar on purchases over $5,000; 1 point per dollar on all other purchases

  • A host of other travel perks, including an annual $200 credit for airline fees, airport lounge access, and rebates on the application fees for Global Entry or TSA PreCheck

  • $450 annual fee

  • Note that this is a charge card, requiring you to pay the full balance each month

For specific airlines

Southwest Airlines: Chase Southwest Rapid Rewards Premier Business Credit Card

southwest (new)

United: United MileagePlus® Explorer Business Card

united mileage plus

Delta: Gold Delta SkyMiles® Business Credit Card from American Express

delta AMEX

American Airlines: CitiBusiness® AAdvantage® Platinum Select® World Mastercard®

american airlines (new)

How to apply

Be selective

The feeling of cash in hand is seductive, but while there are clear benefits to getting a new credit card, we don’t recommend running out and chasing every new offer that comes along.

Multiple applications can ding your credit score. Your score drops each time a bank requests your credit report. And your average “card length history” goes down whenever you add a new card, which brings your score down again.

That said, a new card can improve your debt-to-credit ratio (a measure of how much you owe versus available credit at your disposal)—a key component of your credit score—as long as you don’t apply for too many in a short period of time.

Gather your info

Before you apply, here’s the info you’ll need on hand:

  • Business name (or your name if you’re a freelancer)

  • Employer Identification Number (or your SSN if you’re a sole proprietor without an EIN)

  • Industry

  • Entity type (partnership, corporation, or sole proprietorship)

  • Address and phone number

  • How long you’ve been in business

  • Number of employees

  • Annual revenue

  • Estimated monthly spend

You’ll also need to offer up a few personal details like your household income and outstanding debt. If you’re a startup, banks will look more closely at your personal credit history—less so if you’ve been in business a few years.

The final sobering step: you’ll need to make a personal guarantee acknowledging that you’re fully on the hook for repaying your card debt, even if the business fails.

Tell the truth

Good personal credit is ultimately what makes or breaks your approval—but you can increase your chances of success by applying to a bank where you have an existing relationship, like an open checking account.

No matter what, even if your application isn’t perfect, don’t lie. It’s illegal, and it can open you up to all kinds of obligations if your business fails.

Avoid these common pitfalls

Read the terms and conditions

You know that small print? The text that makes your eyes glaze over? In this case it actually matters. Business credit cards aren’t regulated by the consumer protections offered under the federal Credit CARD Act of 2009—so keep an eye out for changing interest rates, due dates, or fees.

Pay your balance (yes, every month)

Avoid a world of pain by diligently paying off your card each month. Penalty fees on charge cards and interest on credit cards will quickly eat into your bottom line—unless, of course, you’re still within an 0% APR introductory period. That said, if you do end up paying interest for a balance on a business credit card, you can claim it as a business expense on your taxes.

Carrying a balance will also hurt your business’s credit score, which will hurt your ability to secure financing in the future. It can also hurt your personal credit score. Though some issuers only report seriously sketchy activity to consumer credit bureaus, others (like Capital One), report all business credit activity.

Manage employee cards

If you’re giving cards to employees, only give them to people you trust, who have frequent expenses.

Set some simple, clear rules around spending. What’s the limit on meals? Hotel rooms? If employees have alcohol with a meal, can that go on the card as well? The policy can be different depending on the needs and seniority of the employee, but it should always be written down—and each card-holding employee should sign it.

Some cards will trigger a text or email each time an employee makes a purchase (or a certain type of purchase). Others will allow you to cap expenses on individual cards—like limiting gas to $50 per day. Regardless, you or your accounting department should review each statement and quickly pull cards from employees with any suspicious activity.

Remember: your card is for business only

We’ve said it before, but we’ll say it again: don’t put your personal spending on your business credit card.

If you’re a corporation or limited liability company, mingling your personal and business finances can make you personally liable for your business’s outstanding debts.

And, for all types of companies, keeping things separate will make your accounting and bookkeeping simpler. Who doesn’t want that?


This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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