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Business credit cards, similar to personal credit cards, are a flexible funding solution to help pay for day-to-day needs or even larger expenses. They can also help small businesses build and maintain a positive credit history with on-time payments and responsible card usage. Some business credit cards also offer rewards, like cash back or points to use towards hotels, car rentals, airlines and other perks.
With so many options out there for small business credit cards, how do you know where to start? We’ll help you make a more informed decision on choosing the best small business credit card for your needs.
What’s the Difference Between Personal Credit Cards and Business Credit Cards?
If you’re new to business credit cards, you may assume that a business credit card is exactly the same as a personal credit card. While personal credit cards and business credit cards are both considered revolving lines of credit and generally work in a lot of the same ways, there are a few important differences between the two funding options:
- Credit limits: While credit limits can vary based on one’s credit history, income and the lender, small business credit cards often have higher credit limits than a typical personal credit card limit due factors like to the higher revenue of a small business when compared to an average individual’s personal income.
- Credit reporting: Personal credit card providers work with one or more of the three main credit reporting bureaus, which include TransUnion, Experian and Equifax. On the other hand, business credit card providers work with commercial reporting bureaus, which are Experian Small Business, Equifax Business and Dun & Bradstreet. Additionally, some business credit cards send payment information to both personal and business credit bureaus, which can affect one’s personal and business credit reports.
- Usage: A business credit card is for use only to pay for business expenses, and not for personal, household and/or family purposes. On the other hand, a personal credit card can be used however the cardholder wishes to use it.
- Rewards and cash back: Though rewards are common for both personal and business cards, business credit cards often have perks that are designed to benefit small businesses, like corporate travel, general office needs and/or professional services.
What Is the Best Small Business Credit Card?
There are many small business credit cards available, so it’s important to know which ones your company may qualify for. The best small business credit card is one that offers the best interest rate, credit limit, rewards and/or features for you. Here are some of the leading business credit cards available today for applicants with a good to excellent business credit rating:1,2
- Capital One Spark Cash for Business: This business card offers the option of 2% cash back (with an annual fee) or 1.5% cash back (with no annual fee), in addition to one-time new member bonuses. The card carries a variable purchase APR, currently set at 20.99%, and is based on the Prime rate.
- Chase Ink Business Cash Credit Card: Thanks to a $750 bonus offer, 5% cash back in specific spending categories and an introductory 0% APR for 12 months (with variable 13.24% to 19.24% APR thereafter), this card offers solid rewards for qualified small businesses.
- American Express Blue Business Cash Card: This card offers 0% APR for 12 months, and has a variable 13.24% to 19.24% APR after the first year, depending on factors such as an applicant’s creditworthiness upon application. With no annual fee, 2X reward points up to $50,000 and 1X thereafter, this card can offer funding flexibility for small businesses who qualify.
- American Express Delta SkyMiles Reserve Business Card: If running your small business requires significant travel, you may want a credit card like the Delta SkyMiles Reserve American Express Business Card, which offers 60,000 bonus miles and other perks upon spending $4,000 in the first 3 months of account opening. However, with a higher $550 annual fee, this business credit card option may not be the most affordable credit card for all business owners.
- Capital One Spark Miles Business Credit Card: Another solid option for frequent travelers, this business credit card provides a one-time mile bonus offer upon account opening, $100 credit to use for Global Entry or TSA PreCheck, 2X points on purchases and $0 annual fee for the first year ($95 thereafter). This credit card has a 20.99% variable APR.
- Chase Ink Business Preferred Credit Card: Qualified applicants can take advantage of a $1,000 sign-on bonus point offer, increased bonus points in certain spending categories and a flexible points and/or cash back redemption system. The Chase Ink Business Preferred business card has a variable APR of 15.99% to 20.99%.
- American Express Business Gold Card: This business credit card option has a generous 4X bonus point system on your two most-used spending categories, bonus points on other purchases as well as a sign-on bonus point offer. A $295 annual fee and variable 14.24% to 22.24% APR apply to this funding option.
What Other Factors Should I Consider When Applying For a Business Credit Card?
Business credit card providers may offer additional features beyond those already mentioned, such as balance transfer options, fraud protection, purchase protection, free employee cardholder accounts, discounted corporate travel/lodging rates and/or other sign-up bonuses. However, some of these special rewards may be exclusive to businesses with higher business credit scores, so it’s a good idea to review all account features in order to find the best business credit card option available for you. If you’re looking for a specific account feature or benefit, you may want to search online for cards that work for your needs.
How Do I Apply for a Small Business Credit Card?
Before you apply for a small business credit card, it’s a good idea to gather any important documents you may need for the funding application. You’ll also need access to general company information, such as your company’s EIN and/or your Social Security number (where required), business bank account(s), personal financial details as well as proof of identification for any other business owners.
If you’re ready to apply for a small business credit card and have all the required documentation, you can apply directly through a business credit card provider’s website, or in some cases, over the phone. Additionally, you may also pursue a business credit card through funding offers you’ve received, such as solicitations through the mail.
What Credit Score Is Needed for a Business Credit Card?
Like personal credit card issuers, you can find business credit cards for a wide range of small businesses, including those with less-than-perfect credit. Some companies have excellent credit scores, so they typically qualify for cards with some of the lowest business credit card interest rates available. On the other hand, small businesses with very new credit or no credit history at all may need to pursue specific types of credit cards, such as secured or no-credit business cards.
What Is a Good Business Credit Score?
The major business credit reporting bureaus work slightly differently, so credit scores for a particular small business can vary between agencies. In general, business creditors use the following rating scales to assess a business credit score:
Dun & Bradstreet PAYDEX Score Range: Features a scale of 0 – 100, with 100 being the highest credit grade. Scores of >49 points are considered “poor,” while 50 – 79 points fall in the “fair” category, and 80 and above are “good” business credit ratings.
Experian Intelliscore Plus: This scale also goes from 0 – 100, with scores between 1 – 10 representing a “high” risk; between 11 – 25 points is a “high to medium” risk; 26 – 50 points reflects a “medium” risk; 51 – 75 points reflects a “low to medium” risk; and 76 points or better represents the lowest risk for this measure.2
Equifax Business Credit Risk Score: This scale has a broader range, from 101 – 992, with the lowest scores reflecting a higher funding risk for small business lenders, and the highest scores reflecting the lowest funding risk. A “good” score using the Equifax business credit score range is roughly 557 points.3
Can I Apply for Business Credit Without Personal Credit?
Depending on factors such as your small business’s organizational structure, its credit history and income, some credit card providers may need to review a business owner’s personal credit history and/or perform a credit check in order to make a more informed application decision. For this reason, it’s helpful if small business owners have at least a good personal credit score to help secure a business credit card with more favorable rates.
Additionally, some credit card agreements require a personal guarantee from at least one or all business owners, which means that they agree to be financially responsible if a business credit card balance is unpaid.
While many credit card providers require a personal credit check and/or guarantee, you can look for specific types of business credit cards, such as secured cards, to help fund your company if you have very new business credit or no credit history at all. Secured credit cards can also help you build a positive small business credit history over time. Some of these business credit card options may include:1,4
- BBVA Secured Visa Business Credit Card: With a 16.24% APR and business rewards, a BBVA card may be a good financing option for new small businesses to help responsibly build a positive credit history.
- Capital One Spark Classic for Business: This secured business credit card offers cash back rewards as well as no annual fee. With a variable interest rate of 26.99%, this option may not offer the lowest interest rates available for a secured credit card.
- Wells Fargo Business Secured Credit Card: With no annual fee, cash back rewards and other bonus options, this credit card may be a good fit for new companies that want to build their credit profile. This card has a Prime + 11.90% purchase interest rate. Note: Applications for this funding option are currently paused until May 16, 2021.
- Brex Card: This unique business credit card offers high credit limits, bonus points on all purchases and other rewards, yet it does not require a personal guarantee or personal credit check in order to open a new credit account. However, in order to qualify for a Brex Card, small businesses must maintain a minimum bank account balance of $100,000.
How Do Businesses Establish a Credit History?
While a small business credit card can be a great tool to improve an existing business credit score, you typically need to establish your small business credit history before applying for any form of business credit.
Follow these steps in order to establish and continue building a business credit history for your company:
- Apply for a unique Employer Identification Number, similar to a Social Security number for individuals. You may also want to apply for a Dun & Bradstreet D-U-N-S number, though it may not be required for all business credit cards.
- Publish your small business’s contact information, including your phone number and address, online and in appropriate local/regional business directories.
- Open a business bank account in order to formally separate your personal finances from your enterprise.
- Check the major business credit bureaus: Experian Small Business, Equifax Business and Dun & Bradstreet, to verify the information on your business credit file and/or open a file for your company.
- Work with suppliers, partners and/or other companies who regularly report payment information to business reporting bureaus in order to build your credit report. If you’re not sure, ask before signing any new agreement.
- Aim to always pay bills on time in order to avoid negative marks on your business credit history.
1NerdWallet. (2021). 12 Best Small Business Credit Cards of April 2021.
2Wilson, B. J. (n.d.). Best Business Credit Cards of April 2021.
3Ashworth, B. (2021). What Is a Good Business Credit Score?
4Speiser, M. (2020). Equifax Business Credit Report: Everything You Need to Know.
5WalletHub. (2020). No Credit Business Credit Cards.
The information in this article is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial, legal or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.