A business credit card is a line of credit issued to a small business or sole proprietorship. Business credit cards allow business owners to keep business and personal expenses separate. By doing so, record keeping is easier—especially at tax time.
How Do Business Credit Cards Work?
Business credit cards operate just like personal credit cards with the exception that the card may have a different rewards structure or offer different protections.
Business credit cards often offer generous welcome bonuses and planning the opening of new business credit cards to align with the major business purchases you make each year can yield hundreds or even thousands of dollars in rewards.
What Are the Types of Business Credit Cards?
The two most common types of business credit cards are either small business cards or corporate cards. The cards on this list are small business cards, which can be applied for without establishing a custom financial arrangement.
Small Business Credit Cards
Most cards marketed as business credit cards target small businesses. These cards help business owners manage finances while earning rewards and reaping benefits designed for small businesses—intro APR periods, free employee cards, zero liability protections and purchase or travel protections. Many of these cards—including the best business secured cards—are also designed to help businesses build credit or—like the best credit cards for new businesses and startups—manage everyday purchases during business infancy.
Corporate Credit Cards
P-cards, or purchase cards, also known as corporate credit cards, are typically only offered to businesses with significant annual expenses—think a quarter million dollars in yearly expenses or more. These cards typically offer many of the same features small business credit cards do but on a much different scale and with much different management. Corporate cards are often managed by large programs designed to cater to corporate expense tracking systems and may have different fee structures, reward structures and perks built in.
How Many Business Credit Cards Should I Have?
How many business credit cards are right for you or your business is up to you and your specific needs. Carrying multiple business cards may allow you to earn more varied rewards, maximize your cash-back potential, provide a more comprehensive set of benefits and more, but it’s worth realizing ahead of time that managing multiple accounts means more time, more monitoring and paying more bills.
Different types of cards offer different rewards, so if you want to earn more than one type of reward, you may need more than one type of card. Like consumer cards, some business cards earn airline-specific points while others earn cash back. If you want to earn both with only one card, a nice compromise is a flexible-reward-currency card. The Chase Ink Business Cash® Credit Card, for example, earns Chase Ultimate Rewards®. Not only can Chase Ultimate Rewards be redeemed for travel or cash back, they can be transferred to participating hotel and airline partners and transferred to personal Chase accounts for more redemption value with personal credit cards including the Chase Sapphire Reserve®.
Benefits play into a decision to carry multiple cards, too. If your cash-back card offers extended warranty benefits but no travel protections, you may want a separate business card to use for booking business travel. Benefits may be often overlooked in favor of rewards, but the value of many benefits can easily outpace rewards in the case of many insurances and protections offered by the best business cards.
Take some time to research and compare many of the best business credit cards to make the most of your business expenses:
If you operate multiple small businesses, using a separate business credit card for each business can be useful in keeping business purchases and transactions separate from each other, but because most business credit cards require the owner provide a personal guarantee, it’s important not to apply for too many business credit cards—even for separate businesses—at the same time.
Inquiries against your personal credit when applying for business credit cards may impact your credit score and perceived creditworthiness by a lender, so it’s best to space out your business credit card applications, even when the cards are for separate businesses.
How To Get a Business Credit Card
When you’re ready to get a business credit card, you’ll need to gather some information in order to apply. Be prepared with:
- An Employee Identification Number (EIN) or Social Security number (SSN)
- Basic business information, including the age, address and structure of your business
- Annual business revenue
- Estimated business spending
- Personal income information
You can apply online, by phone or in person at a local branch, if available.
How To Get a Business Credit Card Without a Personal Guarantee
Establishing business credit can be difficult, and some cards will require a personal guarantee. This means an individual (usually the one applying for the card on behalf of the company) will be held liable for any balances left unpaid on the card. For individuals who don’t want to be tied to a business account, there are cards available that don’t require a personal guarantee, such as the Brex Card.
How To Get an Instant Approval Business Credit Card
Most cards that let you apply online will let you know right away if you are approved. Occasionally the bank may want additional information before giving you a credit line, but if it’s a “yes,” you’ll usually learn when you apply.
How To Get a Business Credit Card With Bad Personal Credit
For small business cards, your personal credit score is often considered as part of the application process. If you have bad credit, you’ll need to limit the cards you consider to those that are designed for anyone with poor or limited credit history. Business secured cards are the most accessible option for those who can afford the deposit required to secure the card. Other options include improving your credit score before applying or looking for cards that don’t require a personal guarantee.
Read more: Best Business Credit Cards for Bad Credit
How To Get a Business Credit Card for a Startup
Small businesses, even startups, can get a business credit card.
When applying for a business credit card, it’s acceptable to put $0 for revenue, which is often the case with a startup. Banks will take into account any other income sources as well as the applicant’s personal credit score and previous relationship with them (a personal checking account, for example) when deciding whether or not to approve a business credit card.
How To Get Approved for a Business Credit Card
When you apply for a business credit card, you may be asked for:
- Your name, date of birth and address
- Your business name, inception date and industry
- Your Social Security number (SSN)
- Your business’ Employer Identification Number (EIN)
- Your personal income
- Your annual business revenue
Not all information may be required. For instance, an EIN is typically an optional provision. You may also be required to list your ownership percentage of the company.
If you’re preapproved for a card, don’t waste much time before applying. Changes made to your credit report or credit score between the time you’re preapproved and the time you apply for a card may affect your chances of approval.
If your preapproval request is denied, identify the factors most likely to affect your creditworthiness and work toward repairing them. If your credit score isn’t in the “excellent” range, what’s holding it back? If your credit utilization is too high, consider paying down balances before applying for a new card. If you’ve applied for too many cards recently, it’s best to wait at least a few months before applying for a new card.