There are a few factors to consider when looking for a credit card for your business. There are plenty of options out there and generally, credit card firms want to do business with yours. So, spend some time looking for the right credit card for your business.
We’ve reviewed a number of business credit cards and financing and loan offers from our partners in an effort to give you a variety of different options to choose what’s right for your business.
Business credit cards
The Blue Business℠ Plus Credit Card from American Express
American Express offers 2x the points on the first $50,000 in purchases each year (and 1x after). There’s no yearly fee andthe card is designed for businesses that need to make fairly large purchases. It comes with Amex’s service and security.
Spark Miles for Business
Capital One offers this card for businesses with excellent credit. It has a generous rewards program that offers unlimited 2x miles on every business purchase. Businesses can also redeem these miles with no blackouts or seat restrictions. $0 annual fee to start (goes up to $59 after that) and offers a 50,000 miles bonus for new customers.
Chase Ink Business Cash Card
One of the highest rated business credit cards, Chase’s Ink Business Cash Card offers $300 cash back after you spend $3000 in the first three months after opening the card. There’s no annual fee and you’ll get 5% cash back on officesupplies and utilities, 2% at gas stations and restaurants, and 1% cash back on all other purchases — with no limits on the cash you can earn back.
Bank of America’s Business Advantage Cash Rewards Mastercard
You can earn up to 3% back with Bank of America’s Business Advantage Cash Rewards card. The card offers a $200 credit bonus if you spend $500 within 2 months of opening the card. There’s no annual fee and you can receive your cash back as a credit or your card or have the cash reward deposited into a Bank of America small business checking or savings account.
Starwood Preferred Guest Business Credit Card from American Express
The Amex Starwood Preferred Guest Business Card is designed for business owners and employees with an interest in accruing hotel points. Open up this card and you’ll earn 25,000 bonus Starpoints with no blackout dates. You’ll also get access to the Sheraton Club lounge. $0 initial yearly fee will rise to $95.
U.S. Bank FlexPerks Business Edge Travel Rewards Card
You can earn 20,000 FlexPoints upon enrolling in the U.S. Bank FlexPerks Business Edge Travel Rewards Card, but you’ll have to spend $2000 within 4 months of opening an account. The good thing about FlexPoints and this card is that they give you reward access to travel on over 150 different airlines (including American and Delta) with no blackout dates or online fees. Airline award tickets start at 20,000 FlexPoints.
Secured business credit cards
Wells Fargo Business Secured Credit Card
A secured credit card is a great way for businesses with low or no credit to start building credit. This card has a credit line ranging from $500 to $25,000.
It will require a security deposit but functions like a regular credit card, including a rewards program.
BBVA Secured Visa Credit Card
Another option for a business to build or rebuild its credit. This card waives its yearly fee of $40 for the first year and requires a minimum deposit of $500, which can beincreased in increments of $100. You can get free cards for your employees and participate in a variety of rewards programs.
Why use a business credit card?
Business credit cards help build credit for a business
Lenders, banks, and business partners keep track of how healthy your business is through the use of credit scores. Your credit score is like a report card for your business, signaling to partners and lenders how credit worthy your business is.
Using a business credit card is one way to start building credit for your business. By charging expenses to your business credit card and paying them off on time, your good payment history should start positively impacting your business credit score. As your business credit score improves, you’ll find more financing opportunities for your business and better rate.
Business credit cards can increase your company’s credit limit
For most individuals, our personal credit limits are pretty fixed. They’re heavily correlated to our debt to income levels, and because most people see just a general rise in their incomes over their lifetimes, personal credit ceilings don’t haveunlimited upside.
Not so with a business. While starting a business takes Herculean strength and a fair share of luck, a business has unlimited upside for its revenues. That also means that as a business grows, it should be able to grow its own credit limits. That would show in a growing credit limit on a business credit card and better rates on financial products, too.
And because a business can (and should) build its own credit history, it’s possible to improve a business credit score even with bad personal credit.
Business cards enable employee spending
As your business grows, you want to be able to scale it. That means hiring people to do some of the work you were doing in the early days. That frees you up to lead and puts more oars in the water to power your business.
One perk businesses give to some of their employees, especially those in sales, is giving them a credit card for their business expenses. For an employee, having a business card sure beats having to spend your own money and waiting to get reimbursed in the next pay cycle. You can give your employees a business credit card, with its own credit limits, to use for their business expenses.
The benefits of a business credit card over a personal credit card
More perks with a business card than a personal card
Credit card companies want your business. They especially want to provide your business with credit cards. It may not feel that way because you may be getting your credit applications rejected or end up with small credit lines. That’s just credit companies trying to protect themselves.
But, make no mistake — they do want your business. That’s how they make money. You just need to prove to them that you’re worth doing business with (or, put differently, they’ll make money off of your business account and not lose money).
To compete for your business account, credit card companies offer a whole boatload of perks — things like 2x and even 3x points for every dollar your business spends. Expect to see some kind of signing bonus when you open up a new business card. Some bonuses on popular business credit cards typically run at 25,000 to 50,000 points. Points can be redeemed for cash, airfare, hotel accommodations.
One thing to keep in mind when signing up for a business credit card is that many cards require a certain minimum spending (say, like $3000 in 3 months, or something like that) to qualify for the signup bonuses. The spending hurdles associated with business cards are generally higher than those you may be used to for your personal credit cards.
A business credit card helps limit personal liability
A corporate structure protects individuals from liabilities that may occur in their businesses. The same thing is true when you separate personal finances from business finances. It keeps things cleaner and helps ensure that your business and you are seen as separate entities.
By keeping things separate, you enable your business to stand on its own and accrue credit at the business level, without having to rely on your own personal credit. Of course, it’s not that simple and when you start a business, for a few years at least, you’ll probably have to rely on your personal credit until your business establishes its own. But eventually, you won’t have to personally guarantee your business loans.
Different types of business credit cards
Business credit cards come in a variety of different flavors, but at their hearts, they all do the same thing: they allow a business to spend money today and pay for it later.
- General business credit cards: These are your general run-of-the-mill business credit cards. You swipe the card and get billed for your purchase at your card’s next billing cycle.
- Rewards cards for businesses: Why use a general business card if you can use a different business credit card that rewards you for using it — either with cash or travel perks?
- Cash back cards: These cards give you a percentage of your spending back in the form of cash credited to your account. Some cash back credit cards offer a set percentage cash back (like 1% to 3%) of all spending. Others offer different levels of cash back depending on the category of the product you’re buying. So, it’s not uncommon to see 3% cash back on spending at office supply stores, 2% at restaurants and gas stations, and 1% cash back on everything else.
- Travel cards: Travel cards are another form of reward card, like cash back cards. But instead of receiving cash perks, the holder of the card receives points to be used towards airfare or hotels. For business owners who need to travel a lot, it can make a lot of sense to use a business credit card that accrues travel points to offset future travel costs.
- Secured business credit cards: These work a little different than the typical business credit card. Secured business credit cards are designed for businesses and their owners who have a hard time qualifying for a regular credit card. These cards help businesses build credit. Here’s how they work: Secured business credit cards require the holder to put up a security deposit (say, $500) to receive a similar credit line (say like $490). Pay off your credit cards on time and after a while, the credit card company will expand your credit line. And over time, a business can close the secured business card in favor of a regular credit card.
How to choose a business credit card
There are a lot of good options out there when it comes to business credit cards. These companies want your business and provide services and perks to sweeten the deal.
But because there are so many good options out there, it’s hard to compare business credit cards sometimes. Resources like CreditHistory can help your decision making.
Here’s how to choose a business credit card
- Determine what type of card your business can qualify for: If your business is starting out, you’ll definitely need to use your personal credit to get a credit card for your business. If your credit is strong, you’ll be able to qualify for a general business card or a perk card. If not, it’s better to look at the option of a secured business credit card to help you establish and build better credit.
- Choose perks: You’ll need to make a decision between getting cash back or building up travel perks. If you or your business need to travel, look for cards that provide travel perks. If you don’t, you’ll want a cash back card.
- Optimize for perks: Once you decide on what type of perk you want (cash or travel), you’ll want to optimize for that perk. Different cards provide different perks depending on spending categories. Look for cards that provide the highest returns for those categories you do a lot of spending in. Cards that offer 5% cash back in a spending category you don’t use don’t help you. Similarly, cards that offer perks on airlines or hotels that you don’t like or don’t service the cities you visit don’t help either.
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