BUSINESS credit cards

Business Credit Cards

Business credit cards for business are revolving credit lines. As long as you pay the minimum monthly payment and do not exceed your credit limit, you can use the card to draw and repay it.

These funds are best used to finance ongoing expenses such as travel and office supplies.

Pros:

• Redeem points for your purchases

• No collateral required.

Cons:

• High cost with variable rates that could rise.

• Extra fees may apply.

Ideal for:

• For ongoing business expenses.

BuSiness credit cards

Can You Apply for a Small Business Credit Card?

Small businesses are often associated with small enterprises such as a corner shop, an accountant’s office, or a landscaping business. Small-business cards are useful for anyone who’s in business for themselves, regardless of whether they’re working full-time, freelance, gig work, or a side-hustle.

It doesn’t matter if you are an LLC, partnership or an incorporated business. Entrepreneurs are often “sole proprietors”, which accounts for around three-quarters all U.S. businesses. They can apply for small-business credit card.

Why should you get a business credit line? You can keep your personal and business finances separate with business cards. Interest and fees can be deducted from your tax if you only use the card for business purposes. Business credit cards provide rewards, perks, and bonuses that rival or often surpass those offered by consumer credit cards.

What the application requires

Small-business credit card applications are similar to consumer cards but with some important differences. You may be asked for:

• Your business name. This can be your business name if you don’t have one. If you are sole proprietor of the business, you can be considered the owner.

• Contact information for businesses. Don’t worry if you don’t have separate business addresses and telephone numbers. You can use your personal address or phone number.

• A federal Taxpayer Identification Number. This term is not to be taken seriously. If you are a sole proprietor, your Social Security number can be used as a federal tax ID number. You can use an Employer Identification number if you have employees or a formal structure.

• Your industry. What are you doing in your business? You can choose to include a broad range of services such as professional, medical, and retail. Or you could focus on a specific niche. You can think of the service you offer if you are having trouble describing it. Uber is your driver? That’s transportation. DoorDash and Grubhub? That’s delivery.

• How long have you been in business?

• Revenue and expenses. Revenue simply refers to the amount of money your business has brought in. All the money that you have spent to earn that money are called expenses.

What you don’t need

• An official business structure. You will be asked to describe the type of business you are applying for. You will need to indicate whether the business is a corporation, partnership, or LLC. You can also operate your business without any formal or legal structure. You can be the sole proprietor.

• A business credit history. A separate credit file for small businesses is not required to be approved for small-business credit cards. This is because most cards require that you personally guarantee the debts for the business. The business credit card for startups is available based on your credit history and credit scores.

What is the average time it takes to obtain a business credit line? Your credit history will be reviewed by the card issuer. Some business credit cards promise instant approval. However, if your credit score isn’t great, you might need to wait several weeks before your card is approved.

BUSINESS credit cards

Understanding Business Credit

Business and consumer credit cards are different in a few key ways.

A personal guarantee will be required.

Most small-business credit cards include personal guarantee. This means that you are personally responsible for any debts incurred. You are responsible for any balances you accrued, even if your company goes bankrupt. This is something you should keep in mind as you apply and make sure that you don’t borrow more than what your bank can pay back.

Personal credit could be affected

The application for a business credit cards will likely show up on your personal credit report as an inquiry. This can cause some credit score points to drop for a while. Your issuer wants you to be financially sound before you can borrow money. Bad credit business credit cards may be available if your credit history has been poor or thin.

The classification of small-business cards falls into one of two categories . Some report your account payment history to only commercial credit bureaus while others report to both consumers and commercial bureaus. Your personal credit and business credit could be affected by your spending habits with your small business credit card.

These are not generally covered by consumer protection laws

Issuers offer many consumer protections to personal credit cards and small-business credit card holders as a courtesy. However, the law does not require them to. The Credit Card Act 2009, which is consumer-friendly, sets important limits on fees, interest calculations, and disclosures for personal credit cards. However, it does not apply to business credit cards.

Corporate cards don’t work for small-businesses.

There are two types: small-business cards or corporate cards. A small business credit card is best for those who are just starting out, and have a high revenue. You might consider switching to a corporate credit card once you’ve made it big. This will limit your financial responsibility for the account.

BUSINESS Loans

Business Credit Scores vs. Personal Credit Scores

Credit scores can be the same for businesses as individuals. If you are just starting a business, your personal credit will likely be sufficient to get a small-business loan or credit card. As a business grows its credit, it will be easier to get financing apart from the owner’s credit.

Here are some key differences between personal and business credit scores.

Reporting bureaus

Credit reporting bureaus, which collect data about debts, then use this information to determine how risky it is to lend money to individuals or businesses, generate business scores similar to consumer credit scores. Higher scores indicate lower risk.

Equifax, Experian, and TransUnion are the main credit reporting agencies for consumers. For business scores, the main bureaus are Equifax, Experian and Dun & Bradstreet.

Range

The range for consumer credit scoring systems is typically 300-850. Business scores are usually between 0 and 100.

Standardization

Although consumer credit bureaus do not collect any information from one another, they use the same algorithms to calculate scores. Your personal scores will likely be identical from one bureau to another. The algorithms used to calculate business credit scores don’t conform to industry standards and may vary from one bureau or another.

Access

Federal law allows you to get a free copy your credit report from all three major consumer credit bureaus every 12 months. You can also access your personal credit score free of charge in many ways ( , including through NerdWallet). Business credit is not so easy. To see your company’s credit score and credit report at the major business credit bureaus, you will need to pay.

Privacy

Only you or certain companies have access to your personal credit scores and reports. However, business credit reports are public information. You can also get information about other companies if you’re willing and able to pay.

BUSINESS credit cards

How to Choose a Business Credit Card?

There’s a good chance that you will use your business credit card a lot. Make sure you get a one with favorable terms. Here’s how:

Check out your company’s spending habits

It is important to choose a card that has a low APR or low ongoing interest if you intend on carrying balances month-to-month. This will give you more options than looking for great rewards. A card that offers a large sign-up bonus as well as lucrative rewards may be the best fit if you intend to pay in full each month.

Find out which type of reward you should choose

Start by looking at what your costs are if you want to earn big rewards. A card that offers bonus rewards for office supplies and travel is a great choice for businesses that spend a lot. A flat-rate rewards card is a good option for companies that spend more than the standard categories.

Find business-friendly benefits

You can match receipt photos to your card purchases with some cards. Many cards offer employee cards as well as itemized end of the year statements to aid with tax time.

BUSINESS credit cards

How to Compare Business Credit Cards?

Here’s how to compare and evaluate different cards as you narrow down your options based on your company’s needs.

Annual fee

Most of the top small-business credit card companies charge an annual fee. This is often around $100. You can easily offset the fee with the rewards you get from your spending. Particularly high-volume businesses can reap rewards that exceed the fee. A card that offers a 2% reward rate means you can earn $4,000 per year in rewards if you spend $200,000 annually. An annual fee could indicate a high limit business credit card if you spend that much. However, your creditworthiness will determine your credit line.

Annual fees can also be deducted from business expenses. If you are 100% against paying an annual fee, there is a fine option of no-fee.

Structure of rewards

You have two options when it comes to a rewards credit card. The first is whether you prefer a card with a flat rate or one that offers bonus categories.

• Flat-rate cards offer the same rewards for every purchase regardless of where you shop or what you buy. A flat-rate card is best for those who want simplicity or have a business that has a wide range of expenses.

• Bonus-category cards offer a higher reward rate for certain categories, and a lower base rates on all other categories. These cards might be right for you if you are comfortable keeping track of your spending and moving it around to maximize your return. If you are a frequent spender in a small number of areas, a bonus category card can be a great choice. The most common bonus categories for business credit cards are office supplies, travel and telecommunications.

You can also choose to receive your rewards in cash back or points.

• Cash-back cards allow you to get a percentage back on every purchase. Flat-rate cards offer 1% to 22% back — spend $1,000 and get $10 to $20 back. You can get as much as 5% on bonus-category cards. Most often, cash back can be redeemed as credit to your account.

• Points cards allow you to earn points or miles for every dollar spent, at either a flat rate or with bonus point in certain categories. You can redeem these rewards for travel but you might also be eligible to receive cash back or merchandise.

Initial APR Period

Many cards offer a lower rate of interest, sometimes 0%, when you open your account for the first time. This 0% period can last up to a year. If you are looking to finance a large business purchase, this can be a great option.

Current APR

The APR on your credit card doesn’t need to be a significant factor in your decision if you intend to pay your monthly credit card bill in full. You won’t pay interest. The ongoing interest rate is important if you plan to carry a balance month to month. If you plan to carry debt, interest charges can quickly eat away at the value of your rewards.

Options for financing

A few small-business credit cards offer unique financing options such as a discount for paying early, or the option to set up installment plans that pay off certain charges. These are useful for businesses that have irregular cash flows or those with seasonal business.

Employees get free cards

You’ll want to spend as much as possible on your company card if you want to earn rewards. Many issuers offer additional cards for employees who have the authority to spend money on behalf their business. It is possible to limit spending or place other restrictions on employee cards.

Tools for managing expenses

It is helpful to have tools that help you track expenses and categorize them. You may be able download transaction data to your bookkeeping software. You could also match receipts with transactions. You may also receive a detailed annual report to help you prepare your taxes.

Perks

Consider a card that will make your travel more enjoyable if your company requires you to travel frequently. Hotel and airline cards co-branded offer upgrades and special status. You may be able to access airport lounges with some cards. Some cards provide travel insurance and rental car coverage to give you peace of mind.

BUSINESS credit cards

Getting the Most Out of Your Business Credit Cards?

When possible, pay with your credit card

A rewards credit card is a great option for entrepreneurs who pay their bills on time and are careful not to overspend. You can earn points, miles, or cash back quickly by paying in full each month. If possible, avoid paying with credit cards that have a convenience fee.

Grab your sign-up bonus

You will need to spend a minimum of a few thousand dollars in order to qualify for the sign-up bonus. To ensure you aren’t missing out, make sure to review your terms and keep track of your spending.

Find out when the introductory 0% APR ends

To avoid any unpleasant surprises, make sure you read your credit card statements.

You can deduct interest and fees from your taxes

You can deduct fees and interest from your business expenses if you use your card to pay business costs. You can deduct these expenses at tax time.