If you have a business, chances are high that you have expenses that need to be made online, or expenses which require a credit or debit card. Business credit cards are easier to use for expenses such as travel, rental cars, and similar expenses because they don’t tie up funds held in your business checking account. As long as you have the cash flow to pay the bill each month, credit cards are a great way to go.
Business credit cards are also a great way to track and categorize business expenses, or monitor employee spending. If you are looking for a new business credit card, then be sure to check out these offerings, all of which offer some form of a rewards program, including, cash rewards, rewards points, travel points, and more.
Featured Small Business Credit Cards
Great For: Rewards
Annual Fee: No annual fee*
- Earn a new cardmember bonus of $150 after you spend $500 in net purchases on your card within the first 90 days of account opening.
- 3% cash back on all cellular, gas and office supply store net purchases
- 1% cash back on all other net purchases
- No cap on total rewards and they never expire!
- Plus, a 25% Annual Cash Rewards bonus, up to $250
- No annual fee*
- Net purchases are purchases minus credits and returns
Why a Line of Credit Makes Sense for Your Business
When you’re trying to build a new business, it makes sense to have at least one open line of credit. After all, you may need to buy supplies, pay employees, or purchase special equipment at a time when funds are low. Having an open line of credit can help you get through lean times without taking drastic measures or getting a loan from a bank.
With that being said, business cards work a little differently than personal credit cards. For example, some banks, including Citi and Bank of America, don’t report business credit card activity to their customer’s personal credit reports. Meanwhile, some banks pick and choose how to apply the CARD Act of 2009 to business accounts, leaving business customers with fewer protections.
With all that being said, the 2015 Small Business Credit Card Study from CardHub.com did point out some big similarities between how banks treat business and personal credit card accounts. One similarity is that, like with personal accounts, individuals are held liable personally for their credit card use. Another: Almost every major card data uses information from your personal credit profile to determine eligibility for a business account.
In other words, it’s nearly impossible to keep your personal and business credit profiles from intertwining. This is just another reason your credit matters; if you don’t take care of your personal credit health, your business could suffer too.
How Business Credit Cards Work
Still, business credit cards still function the same way personal credit cards do. When you use your card to make a purchase, you are offered a temporary loan against your line of credit. If you pay your balance in full before the bill is due, you’ll never need to pay interest. On the other hand, if you carry a balance, you’ll pay a certain percentage of interest on top of the balance you owe each month. The amount of interest you’ll pay is based on your APR, or Annual Percentage Rate.
Here are a few other principles you should know about small business credit cards:
Many small business cards charge an annual fee – Most of the best business cards on the market offer a slew of additional perks and rewards. Unfortunately, that generally means they charge an annual fee as well. In most cases, annual fees on business cards are between $49 and $150.
Some of the best small business cards offer generous rewards programs – Almost all small business credit cards offer perks as an incentive to use the card for everyday spending, business supplies, and equipment. These perks can include everything from travel rewards to points you can redeem for gift cards or cash back.
You don’t necessarily need a Tax ID number to apply for a small business card – Although many people assume they need a Tax ID number of Employee Identification Number to qualify for a business card, that couldn’t be farther from the truth. In many cases, you can qualify for a business card by stating your business is a sole proprietorship and using your Social Security Number on the application. You don’t need to own a large business either; any activity you do on the side to earn extra money should be seen as business income in the eyes of the IRS.
Business cards often offer larger lines of credit than personal credit cards – Because small business cards are offered to those with business expenses that may be higher than one’s personal expenses, small business cards often come with high lines of credit. Some even work as a balance transfer credit card with zero percent interest on balance transfer. And if you need to use your card for a large business purchase, having some flexibility is always a good thing.
How to Select a Small Business Credit Card
Now that you know all about small business credit cards and how they work, it’s time to decide if a business line of credit is right for you. Here are some tips that can help you figure out which business card is right for you – and if you can qualify for one in the first place.
Determine whether your business activities will help you qualify – Although you don’t need a large business with employees to qualify for a small business card, you do need to participate in a money-seeking activity. You can use the IRS definition as a guide:
“The term trade or business generally includes any activity carried on for the production of income from selling goods or performing services. It is not limited to integrated aggregates of assets, activities, and goodwill that comprise businesses for purposes of certain other provisions of the Internal Revenue Code. Activities of producing or distributing goods or performing services from which gross income is derived do not lose their identity as trades or businesses merely because they are carried on within a larger framework of other activities that may, or may not, be related to the organization’s exempt purposes.”
Be aware of your personal credit score and overall credit health – Since banks that issue small business cards will look at your personal credit score when you apply, it’s important to keep your credit in tip-top shape. If it isn’t there already, you might want to take some steps to improve it first. Since business cards usually offer a lot of perks, they are fairly difficult to qualify for.
Look for a card with low fees and/or a low APR – If you plan to utilize your line of credit often or carry a balance, it is wise to look for cards with the lowest APR possible. A card with a reasonable annual fee can also help keep more money in your pocket.
Compare perks and rewards – Most of the best small business cards offer a generous rewards program with points redeemable for gift cards, travel, or cash. Still, not all rewards programs are equal. Whatever you do, take special care to compare each rewards program to see how it stacks up. In addition to rewards, the right card can also help you qualify for all kinds of perks including cash back, trip cancellation/trip delay insurance, primary rental car insurance, and more.
If you need a line of credit for your small business, a small business credit card might be exactly what you need. By offering a flexible line of credit that is there when you need it, your credit card can save you a lot of hassle and help your business survive lean times.
Just make sure to research all of the best business cards before you apply. There are plenty of options, but only you can decide which card is best for your situation.
Advertising Disclosure: This page contains advertisements. This page does not include all available credit card offers from all advertisers (that would be literally hundreds, if not thousands of credit cards). This credit card review was not reviewed by, endorsed, paid for, or approved by Citi or any other credit card issuer. All opinions, reviews, and recommendations reflect the author’s honest opinions, beliefs, and experiences. We receive compensation from our advertisers. Compensation impacts how and where products appear on this site (including for example, the order in which they appear). Back to Top.